Glanbia predicts positive year as milk markets evolve

By staff reporter

- Last updated on GMT

Related tags Glanbia Milk Joint venture

Glanbia expects to report a positive performance for 2007 driven
largely by its food ingredients, global nutrition businesses, and
increased demand for dairy products on the global scence.

The Irish dairy and ingredients firm will report its 2007 results on March 5, but in a trading statement issued today it said the performance had been "very satisfactory".​ Group managing director John Moloney said this was driven as a consequence of the spread of businesses across the group and a positive market environment. "Whilst global dairy markets continue to evolve as we enter 2008, the outlook for Glanbia this year is positive,"​ he said. "As a group we are continuing to invest and focus on growth and innovation, combined with competitiveness and productivity, and Glanbia is placed for sustained double digit growth going forward."​ In August, when the group reported its half year results, group earnings were seen to have risen some 13 per cent to €1,040.3m. Earnings per share were up 26 per cent to 11.47 c. At that time Glanbia revised its earnings guidance per share to the "high teens" for the full year. Operating profit at the half was mark was seen to have increased 33 per cent to €48.5m on the prior year period. Ingredients and nutritionals activities play an important part in Glanbia's strategy of diversifying its earnings base towards higher-value ingredients. In nutritionals this year it has been able to count a full twelve month contribution from Californian nutritional business Seltzer Companies, which it acquired in mid 2006 for $105m (€81.8m). This move enabling it to establish an integrated nutritional formulation presence across the US and Europe. However has not been all sunshine and roses across the whole group: consumer foods was said to have had a challenging year, and performance will be below that of 2006. In 2007 the liquid milk and chilled foods sectors were affected by a time lag in recovering price increases for raw materials, but the group says it has initiatives planned and already in place to recover the cost increases this year. Likewise, Glanbia said its international joint ventures' performance would be below that of 2006 increases - although the gap was narrowed somewhat in the second half of the year. The UK Glanbia Cheese joint venture had a difficult first half with margin pressure applied by high dairy prices. While cheese prices are to increase as a result, there will be a time lag before this can be realised. Southwest Cheese in New Mexico also experienced margin squeeze, but at half year Glanbia said it should just break even in full year. Glanbia's Nigerian JV with PZ Cussons is also suffering with timing issues for passing on raw material costs. The pigmeat business also took a hit when its factory in Edenderry, Co Offaly, Ireland, was gutted by fire in August. At the same time, worldwide markets for such products proved to be tough.

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