Glanbia on solid foundations
Sales at Irish dairy products and convenience food producer Glanbia dropped by 16 per cent in the first half of 2003 after the group decided to exit the prepared meat business. Adverse exchange rates also took their toll.
Turnover dropped from €1.28 billion to €1.08 billion for the six months to 5 July, while operating profit was down 20 per cent at €35.9 million, mainly due to a €9.5 million charge relating to the sale of Glanbia's UK prepared meats business. Before the charge, operating profit was marginally higher at €45.7 million.
While the reported figures were clearly affected by the decision to quit the prepared meats market, this also masked good performances elsewhere, the group said. The consumer foods and agribusiness operations performed extremely well, while an excellent operating performance from food ingredients was impacted by difficult market conditions and the strengthening of the euro.
The consumer foods unit consists of Glanbia's businesses engaged in the production and marketing of dairy and meat products primarily through retail channels in the UK and Ireland. While turnover was down 27 per cent to €472.7 million as a result of the exit from the under-performing UK businesses in mid-2002, operating profits were boosted by 31.3 per cent to €22.7 million as a result of significant operating efficiencies.
The Irish liquid milk and chilled foods businesses both made satisfactory progress in a very competitive market environment, Glanbia said, with its expansion into the growing functional foods sector progressing well with a range of new products, including Avonmore Milk Plus probiotic milk and single serve Avonmore Supermilk, launched during the half. New functional yoghurts assisted a good overall performance in the fresh dairy products sector, it added.
Despite strong volumes, the UK retail cheese business was affected by intense competition, while the UK fresh pork operations had a satisfactory operating performance in the period. Glanbia has decided to sell this business, although it will retain its Irish pork operations, whose results were impacted by a fire at one of its production facilities during the half.
The dairy food ingredients unit, based in the US and Ireland, improved both its volumes and its operating efficiencies during the half, although the strength of the euro against the US dollar and a decline in US cheese prices meant that results were lower than the previous period: operating profit was down 30 per cent to €13.6 million and turnover fell 9 per cent to €428.1 million.
The agribusiness division - feed, grain, malt, fertiliser, etc. - lifted turnover by 7.1 per cent €149.9 million, while operating profit was €9.35 million, up from €8.84 million in 2002.
Glanbia has implemented a new strategy for this year, moving away from addressing operational and performance issues and towards driving profits via expansion. This strategy has already led to the announcement of a new cheese and whey joint venture with Dairy Farmers of America, and Select Milk Producers in the US, and another with Conaprole of Uruguay establishing a sales and marketing company in Mexico, serving Central and South American markets.
Glanbia is actively pursuing a number of other potential opportunities for business growth in the US, Europe and Africa, the group said in a statement.