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Glanbia profits up as international ingredients business surges

By Shane Starling , 28-Aug-2008

Irish food giant Glanbia has turned in promising half year results with net earnings rising 26 per cent and the US food ingredients and nutritional products divisions performing strongly.

Glanbia predicted full-year earnings would rise 15 per cent year-on-year and analysts praised the strength of the results amid negative currency changes and sharply rising input costs such as energy and milk.

Net earnings for the half year jumped 16.5 per cent from €48.5m to €56.5m.

The announcement follows its €213 million purchase this week of US supplements manufacturer, Optimum Nutrition.

Sales across all its divisions, which include cheese and dairy products as well as dairy-based ingredients, were up 6.3 per cent at €1.106bn.

Time lag

“While organic growth remains strong in Food Ingredients USA and Nutritionals, the performance of Food Ingredients Ireland in the second half will be reduced relative to the second half of 2007, as global dairy market volatility has created a time lag in balancing input costs and market returns,” said managing director, John Maloney.

The company’s international operations and joint ventures reported good results. International business contributed 68 pert cent of its operating profit and rose 22 per cent from €28.4m to €34.6m.

International joint ventures included cheese manufacturers in the US and the UK and a consumer products joint venture in Nigeria.

Glanbia is Europe’s biggest mozzarella supplier for the lucrative pizza market.

Stabilisation

The company, including its functional ingredients division, has benefited from a stabilisation of the milk market that saw prices jump significantly last year.

"Global dairy markets went to a spike in pricing in 2007, have come off that and come back to more normalised pricing which is still above the average of previous periods," Moloney told Reuters. "That's not unexpected and it's not unhelpful."

Of the performance of its Nutritionals division the company said:

“Revenues, profits and margins increased for Nutritionals with this business achieving good organic growth. Nutritionals also benefited from its innovation programme which is delivering products and solutions into the sports nutrition, health and wellness and weight management sectors in the USA, Europe and Asia.”

It was expected Nutritionals would “continue to perform strongly”, and make a “growing contribution to the Group overall.”

The Group’s global nutritionals business produces whey proteins, premix solutions and other nutritional ingredients for use by food and beverage companies.

Across-the-board, Glanbia said it was, “confident of a good overall performance and the Group believes it will deliver double digit earnings growth, in line with market expectations.”

Glanbia’s Food Ingredients division produces cheese, butter, casein and protein ingredients in Ireland and the US.

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