Glanbia shrugs off Dairy Ireland hit to post hot results

12-Mar-2014 - Last updated on 12-Mar-2014 at 13:08 GMT

Talbot: 'We expect 2014 to be another positive year'

Glanbia has boasted powerful growth in 2013 sales and profit, despite struggles in its Dairy Ireland and Ingredients Technologies businesses and squeezed margins.

The dairy products and ingredients giant outlined robust sales increases in its Global Performance Nutrition and Global Ingredients divisions against a backdrop of significant group investment. It is targeting 8–10% organic profit growth to 2018 with a strong focus on the sports nutrition market.

Global Performance Nutrition drove the bulk of the company’s success last year, it said, delivering 20% branded revenue growth and making headway in the US despite fierce competition.

The firm boosted profitability of the division by 28%, with speciality and internet sports nutrition markets proving especially buoyant. Its acquisition of Scandinavian sports nutrition business Nutramino in January would add fresh momentum to the unit, Glanbia added.

Record high costs

However, profit at its Dairy Ireland unit plunged, driven by the underperformance of its consumer products segment. This had been hit hard by record high costs for Irish milk and retailers’ resistance to translating those into price increases. Branded sales also performed weakly relative to own-label.

That said, annual value sales for Dairy Ireland still achieved low single digit increases and agribusiness sales delivered “a solid performance”, it stated. It plans to cut costs by redesigning its supply network and restructuring head office functions.

Plans are also underway for a €15M (£12.5M) ultra-high-temperature (UHT) processing facility at Wealso, Ireland, for long-life liquid milk and cream suitable for exporting to regions such as China, Europe and the Middle East. It expects the plant to be operational in the second financial quarter of this year.

In addition, Glanbia reported market prices for dairy-related products in its Ingredients Technologies business declined because of increased supply of core ingredients such as lactose and whey. That dragged down pre-tax profit for the division, despite demand remaining firm and sales volumes rising.

Expanded production

However, the company expected the development of speciality grains and expanded production of lactoferrin and dairy calcium to have a positive effect this year.

The group declared pre-tax profit up 9.2% for the year to January 4, 2014, from €214.6M (£179.4M) to €226.7M (£189.5M), on 10.5% group revenue growth.

“We expect 2014 to be another positive year for the group,” said recently appointed group md Siobhán Talbot, previously group finance director.

“We will benefit from our ongoing organic investment programme, good prospects for Global Ingredients and Global Performance Nutrition and an expected improvement in Dairy Ireland.

“Our ambition is to continue to deliver a similar annual organic growth rate through to 2018, while seeking to sustain a return on capital employed in excess of 12%.”