Wednesday 21 February 2018

Glanbia MD unfazed by spectre of June Brexit

Glanbia brand ambassador Rob Kearney
Glanbia brand ambassador Rob Kearney
John Mulligan

John Mulligan

Glanbia boss Siobhan Talbot said she would like to see the UK remain part of the EU, but stressed that the UK accounts for less than 10pc of the group's €3.6bn in revenue and so is not a material market for the company.

However, speaking to the Irish Independent as Glanbia released a set of strong full-year results, Ms Talbot said stability remains essential for businesses.

"Like any corporate, uncertainty is something we'd prefer not to have," said the group managing director.

"But ultimately the people in the UK will decide what decision they want to make about participation in Europe. We will handle whatever comes out of that decision-making process."

"Because we have a presence across 34 geographies, we're always managing various geopolitical and economic environments.

"In terms of the core Glanbia presence, the UK is not a particularly significant market for us," she added. "Our primary engagement in the UK is through our joint ventures and associates."

Glanbia Cheese, which is a joint venture between Glanbia and US firm Leprino Foods, processes about 20pc of all milk produced in Wales. It also accounts for about one-third of all UK cheese exports. The joint venture also has a plant in Northern Ireland.

Ms Talbot said that Glanbia also remains acquisitive, after generating strong operating cash flow of €281.4m in 2015. That was €75.2m higher than in 2014. Glanbia paid $217m last year to buy US energy bar business ThinkThin.

"We're continuing to be acquisitive," she said. "We exited the year with a strong balance sheet. We're always looking across the landscape of ingredients, and branded consumer products to see if there's interesting propositions to bring into our portfolio. But it's always about trying to find the right fit at the right price."

Group sales at Glanbia rose 4.1pc to €3.66bn last year, with wholly-owned sales climbing 9.3pc to €2.7bn.

Its group earnings before interest, tax and amortisation (EBITA) were 26.8pc higher at €310.7m, while EBITA from wholly-owned operations jumped 29.9pc to €271m.

The 2015 performance also benefited significantly from favourable foreign exchange rates. The EBITA from wholly-owned operations was 10.5pc higher on a constant currency basis.

On a constant currency basis, the adjusted earnings per share last year was up 10.6pc. Glanbia expects to achieve an 8pc to 10pc increase in that figure on the same basis this year.

The results were ahead of analyst expectations, and shares in the group were relatively muted by mid-afternoon, barely unchanged at €18.39.

At its performance nutrition unit, sales were 6.7pc higher at €923.1m, and EBITA was up 52pc at €135.6m. It was 28.3pc higher on a constant currency basis.

In its ingredients division, Glanbia was more challenged due to deflationary diary markets. Ms Talbot said the two fundamentals of supply and demand for milk have been going in opposite directions, depressing prices.

"The weakness in global demand is being driven by China in particular. I think supply will fall back in response to lower prices and demand will be stimulated by lower prices," said Ms Talbot.

"We would expect things to rebalance. It's very difficult to be definitive about when that will happen.

"At best, you're talking about the back end of 2016."

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