Cheese and nutrition remains a focus for Irish food ingredients company Glanbia but difficult international dairy markets had a negative impact on the financial year, the company confirmed in a statement this week that accompanied its interim results.
"Glanbia has delivered a solid performance in the first half of 2002 in what were extremely difficult international dairy markets," said John Moloney, group managing director.
"Operational and marketing improvements in consumer foods have delivered the anticipated strong profit growth in this division, offsetting the impact of weak global dairy markets on our Irish food ingredients operations. Continued rigorous focus on cash management has significantly reduced borrowings and the lower interest costs have assisted growth in profit before exceptional items and tax," he continued.
According to the results Glanbia maintained sales and operating profit performance in line with the first half of 2001. Operating profit (including share of operating profit of joint ventures and associates) was €45.45m (2001: €45.46m) on a slightly decreased turnover of €1,246.74m (2001: €1,288.67m).
The operating profit result reflects, claims Glanbia, a strong improvement in the performance of the consumer foods businesses, which offset the significant impact of international dairy markets on Irish food ingredients operations.
The USA food ingredients business and the Irish agribusiness division both performed satisfactorily. The operating margin was 3.6 per cent (2001: 3.5 per cent).
Profit before exceptional items and tax increased by 8.9 per cent to €35.63m (2001: €32.71m), a result of lower borrowings and interest costs.
Dairy Food Ingredients is comprised of the USA and Irish dairy ingredients operations, which supply the nutrition and food processing sectors. A satisfactory performance was achieved in the USA in the period. However, Irish operations were impacted by weak international dairy markets in the first half of 2002, which contrasted sharply with the buoyant conditions experienced in the sector in the first half of 2001. Overall, operating profit declined to €19.28m (2001: €28.71m), while turnover declined to €465.36m (2001: €488.89m).
In the USA Glanbia reported that it had achieved a satisfactory performance principally due to enhanced operational efficiencies and continuing growth in advanced technology proteins and other fractionated products. The company continues to consolidate its position as a leading USA and world player in dairy nutritional products. Additional capacity expansion for Bioferrinâ and Provonâ production will be completed by year-end in response to market demand.
Consumer Foods consists of Glanbia's businesses which are engaged in the production and marketing of dairy and meat products primarily through retail channels in the UK and Ireland. This business group had a significant overall improvement in performance in the first half of 2002, benefiting from enhanced operational efficiencies and new product introductions. Significant progress in refocusing businesses around the group's growth strategy was achieved. Operating profit advanced to €17.33m from €7.15m in 2001 but turnover dropped to €641.39m from €650.50m in 2001.
Glanbia reported that the Irish liquid milk and chilled foods businesses both made satisfactory progress in a competitive market environment. The group's entry into the growing functional foods sector with Yoplait 'Everybody' has progressed well, claims Glanbia, and further important new product introductions are planned in the coming months.
The UK retail cheese business had a good performance in difficult market conditions where cheese prices have fallen significantly. The company reported that continued growth in sales, product mix and plant efficiencies improved overall profitability.
Looking to the future the Irish ingredients company stated that it is will continue to make progress in 2002 despite difficult international dairy markets from which no immediate recovery is envisaged. The company claims that it has made progress in the refocusing of operations around its strategy for growth, through the closure of the UK consumer meats business and the sale of the UK food service distribution operation.