Despite mounting economic challenges for industries across every sector, John Moloney has led Glanbia to a strong performance in the first half of 2008.
The company reported a 37.6% increase in pretax profits for the first six monthscompared to the same period in 2007, which sees the figure rise to just over €53.1mn.
Glanbia specialises in cheese and nutritional ingredients and the main driver of profits growth was international consumer demand for cheese. It is the largest manufacturer of cheddar cheese in the US and its stated vision is to be a world leader in its areas of business. This set of results is another step in that direction. Glanbia showed revenues up 6.3% to just over €1.1bn, while adjusted earnings per share were up 26.4% at 15.74 cent.
This follows a similar successful pattern to the other two big Irish food companies – Kerry and Aryzta.
The company is not immune to the slowing economy and revenues in Ireland were slightly down on 2007 at €417.7mn. But that was offset by an 11% gain to just under €688.5m on the international food ingredients and nutritionals business.
Revenues from its cheese and dairy joint ventures in the US, UK and Nigeria rose 7% to €189mn. This international diversification is the real secret of Glanbia’s success, and management must take the plaudits for implementing the strategy. Shareholders are the winners and will enjoy a 10% interim dividend increase of 2.75 cent per share.
Glanbia also announced it had bought Optimum Nutrition in a deal worth €213mn. The Illinois-based firm manufactures some of the leading nutritional supplement brands for the US sports sector. The worldwide market for such products is $30bn.
Moloney also expects the second half of 2008 to be somewhat ahead of 2007, with margins recovering for the company’s Irish consumer foods division and a satisfactory outlook for its agribusiness and property division.
Organic growth remains strong in its US food ingredients arm, although the performance of its Irish food ingredients division in the second half will be reduced relative to the second half of 2007, as global dairy market volatility has created a time lag in balancing input costs and market returns. But overall things look very good.
“International joint ventures are expected to sustain their improved first-half performance,” said Moloney. “For the full year, we are confident of a good overall performance and we believe the group will deliver double-digit earnings growth, in line with market expectations.”
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