Rocketing US cheddar exports fuel strong full-year for Glanbia

By Ben Bouckley

- Last updated on GMT

John Moloney, Glanbia's Group Managing Director
John Moloney, Glanbia's Group Managing Director

Related tags Global dairy market Milk Curd Glanbia

Irish dairy firm Glanbia says that booming US cheddar export sales fed into a strong 2012, but warned that the key risk to the global dairy market in 2012 centred on “significant concerns” regarding the global economic downturn and its effect on consumers.

Announcing its full-year results today, Glanbia said a strong 2011 marked by growing demand from developing economies was likely to prevail in 2012, with strong current growth in global milk production.

The multinational nutritional and cheese company reported a 2011 turnover of €2.734bn (€2.166bn: 2010) for the year ending December 31, while operating profits rose from €136.5m to €166.8m year-on-year.

Commenting on the current state of the market, Glanbia said: “The current view on global dairy market performance is that prices will soften further in the first half of 2012, relative to H2 of 2011, with increased milk and dairy product availability. H2 of 2012 is forecast to be moderately weak again.

“Overall, critical markets such as China, Russia and Southeast Asia are expected to remain solid throughout 2012, limiting market volatility," the firm added.

Discussing its results generally, Glanbia noted strong growth in key nutritional markets that benefited its Global Nutritionals business, and led to unprecedented high whey prices, and the firm estimated 15% growth in nutritional bars, 7% in sports nutrition and 18% in nutritional beverages in 2011.

Within its US Cheese and Global Nutritionals business (€1.38bn: 2011) the firm said that US cheese prices were strong but volatile, since despite US milk production up 1.8% in 2011, higher prices for competing dairy products led to reduced milk volumes processed into cheese, pushing up prices.

But although retail sales of cheese were down overall, this was more than offset by foodservice demand and export sales of American-style cheddar cheese, which were “very strong”, according to Glanbia, up 30% in 2011 after a 60% increase in 2010.

Group managing director, John Moloney (pictured) said: "We expect the operating environment in 2012 to be more challenging than in recent years. Current global economic uncertainty has the potential to impact global dairy markets and fragile consumer confidence.

The group's focus on driving growth in nutritionals, combined with deep dairy market expertise and strong execution capability, position us well for the future. Our guidance for 2012 is for 5-7% growth in adjusted earnings per share, on a constant currency basis."

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