Glanbia reports gains despite dairy difficulties

Date of publication : 7/11/2007

Source : Dairy Reporter

Glanbia remains on course for an estimated 20 per cent increase in profits, despite difficulties within its dairy production unit, the company said yesterday. In a trading statement the company said it expected revenues, profits and margins to be up for the first half of the year, compared to the same period in 2006. The gains were made despite the increasing cost of raw dairy products. Glanbia attributed the growth to an improved performance throughout its diversified operations in dairy, ingredients and agribusiness production and cited its focus on multiple operations as vital to its growth stategy. The company also pledged to continue focusing on its growth strategy of operating with joint venture partners, to improve upon a difficult first half performance last year. Last year the group's sales dipped by about €3m to €922.8m in the six months ended 1 July, while operating profits slipped five per cent to €36.4m. However, the group said that its dairy operations had since been hit by recent dramatic increases in raw material costs, which resulted in problems with its joint ventures in the UK, the US and Nigeria. While still expecting to post disappointing results for the sector during the half, Glanbia said it remained encouraged by market developments and its performance within dairy production. Fears over dairy income were not matched within the group's core-ingredients business though. The company said that its Irish food ingredients division had turned itself around from a difficult first six months over 2006. The US food ingredients and nutritionals segment continued to be the key driver for growth for the company. This performance is expected to be boosted further by the six month contribution from the Seltzer companies, which it acquired last year, according to the group. The consumer foods and agribusiness segment was also expected to perform, with the current marketplace proving to be extremely competitive, the company said. John Moloney, group managing director for Glanbia, stressed that though the company remained cautious over the statement, it generally was confident that its performance would continue to improve over the coming year. "For the full year, there are some short term factors in our international joint ventures that cause us to be a bit cautious at this time," he stated. "However, we expect to deliver strongly in terms of profits, margins and earnings and we are confident that the group is well on target to deliver strong double digit growth for 2007 as a whole."