'Solid' performance from Glanbia in difficult first half

Related tags Nutrition Glanbia

Exposure to volatile international dairy markets impacted the dairy
ingredients business at Ireland's Glanbia in the first half, but
improved performances from consumer food products helped redress
the balance.

Doing business in international dairy markets has been difficult in the first half of the year, according to Irish company Glanbia, but this has not prevented the company from posting solid results for the period in question.

Like its Dutch counterpart Wessanen whose results were published late last month, the Irish company has been refocusing its business on nutritional foods in recent years, but it has placed more importance on its dairy business than the Dutch group, leaving it open to the fluctuations in those markets.

Operating profits for the first half of the year were virtually unchanged compared to the previous period at €45.45 million, despite a slight drop in turnover from €1.29 billion to €1.25 billion. Operating profits were maintained thanks to a good performance from the group's consumer foods business, which offset a decline in the Irish dairy operations.

The restructuring of the business has also meant an increase in costs. The closure of Glanbia's consumer meat unit and a provision for the sale of its UK foodservice operations led to a charge of €75.6 million in the first half, and the inclusion of these costs pushed the group €39.98 million into the red at the pre-tax level.

While Glanbia's domestic food ingredients business struggled because of a sharp downturn in international dairy markets compared to the first half of 2001, the consumer foods business showed a significant recovery year-on-year, helped by improved operating efficiencies and new product launches such as Yoplait Everybody, its first step into the functional food market in Ireland. The retail cheese business in the UK and Ireland also performed well in spite of difficult market conditions.

While the closure of the UK processed meat unit will undoubtedly help Glanbia's overall performance, the future still looks difficult for the company given the exposure of its ingredients business to the volatility of dairy markets. But a core strategy of focusing on consumer dairy and nutritional products should pay off in the long run, given the increasing innovation and interest in this particular segment.

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