Glanbia reports solid H1

Glanbia reports solid H1

Group is also upgrading the 2012 full year outlook to 8 percent to 10 percent growth in adjusted earnings per share on a constant currency basis.  

Glanbia plc (“Glanbia”), the global nutritional solutions and cheese group, announces a solid half year performance for the six months ended 30 June 2012, compared with an exceptionally strong first half in 2011. The Group is also upgrading the 2012 full year outlook to 8 percent to 10 percent growth in adjusted earnings per share on a constant currency basis. Commentary in this release is on a constant currency basis.


Half year results highlights Constant currency


HY 2012

HY 2011


HY 2012





+ 1.6%






+ 6.5%



EBITA margin



+ 40 bps



Share of results of JVs & Associates



- 36.5%



Adjusted earnings per share



+ 1.3%



Dividend per share




  • Strong performance in Global Nutritionals underpinned by positive demand and price growth in key nutritional market segments
  • US Cheese delivered a reasonable first half performance in the context of weaker US cheese market prices
  • Satisfactory performances by Dairy Ireland and International Joint Ventures in a weaker global dairy market environment
  • Acquisition of Aseptic Solutions, a US beverage manufacturer and co packer, for US$60 million in July 2012

Strategic dairy processing joint venture
In another Stock Exchange release today, Glanbia announces that a non-binding Memorandum of Understanding has been signed with its majority shareholder, Glanbia Co-operative Society Limited (the “Society”), subject to contract and approvals, to enter into a 40 percent (Glanbia): 60 percent (Society) joint venture in respect of Dairy Ingredients Ireland. The Society plans to part fund its investment in the joint venture by a 3 percent sale of the issued share capital of Glanbia, thereby reducing its shareholding in the Group to 51.4 percent. The Society’s Board has decided to seek the approval of its members by a simple majority for the joint venture transaction. It will also require the approval of Glanbia plc shareholders at a general meeting, excluding the Society and its associates. Subject to completion of legal contracts and receiving the necessary approvals, the transaction is expected to complete before the end of 2012.

Proposal to reduce Society plc shareholding to 41.4 percent
Separately but related to this joint venture proposal, the Society has announced it is putting a proposal to relevant members to reduce its shareholding in the plc to below 51 percent. Subject to approval, the Society will dispose of shares equal to 3 percent of the issued share capital of Glanbia (in addition to the 3 percent disposal relating to the Joint Venture) and distribute a further 7 percent of Glanbia share capital to Society members. This will result in a reduction in the Society’s shareholding in Glanbia from 51.4 percent to 41.4 percent. The reduction in the shareholding below 51 percent will require 75 percent approval at two special general meetings of the Society. Approval to reduce the Society shareholding to below 51 percent is firstly contingent on the joint venture transaction being approved.

John Moloney, Group Managing Director, said:
“The Group delivered a solid first half operating and financial performance. EBITA margin grew 40 basis points on a constant currency basis to 7.9 percent reflecting the focus by the Group on both innovation in higher margin nutritional products and ongoing efficiency measures. We have also been active in pursuing our growth strategy this year with a US$60 million nutritionals acquisition and significant capital development projects in Ireland, Germany and the USA. Today, we have announced the details of a joint venture with Glanbia Co-operative Society Limited, creating an exciting new business model for post quota growth in Irish dairy processing.

The overall outlook for the Group for the remainder of the year is positive and we are upgrading our guidance for 2012 to 8 percent to 10 percent growth in adjusted earnings per share on a constant currency basis. We also look forward to the successful completion of the joint venture agreement, which offers a compelling strategic proposition for both parties, before the end of the year.”

For the six months ended 30 June 2012


Global Dairy Markets
After a strong 2011, global dairy markets generally weakened during the first half of 2012 mainly as a result of substantial growth in global milk production. Demand remained favourable during the period with all of the major regions showing positive growth versus prior year. However, this was insufficient to offset the increase in supply, resulting in higher inventories and weaker pricing. The exception to this trend continued to be the higher end whey products where tight supply conditions and strong demand resulted in firm pricing through the first half. Recent drought conditions in the US are expected to impact milk supply in the second half of the year, although accurate forecasting remains difficult as the situation continues to evolve. Latest expectations are that general dairy prices should be stable for the remainder of 2012.

US Cheese & Global Nutritionals

US Cheese: Consistent with general global dairy market trends, US Cheese prices were weaker in the first half of 2012, reflecting stronger US milk output and higher levels of cheese production. This lower pricing encouraged positive demand growth particularly in the foodservice and export markets although the retail channel remained broadly unchanged. The outlook for US Cheese prices for the remainder of the year is broadly positive. Recent drought conditions across much of the US have resulted in a sharp rise in feed prices which has already started to impact milk production levels, reducing milk supply. This is expected to result in higher cheese prices for the second half of the year.

Global Nutritionals: The significant growth in whey pricing that was observed during 2011 continued throughout the first half of 2012 due to strong underlying demand outpacing supply growth. Demand was fuelled by growth across each of the key nutritional markets and reflects the ongoing structural trend towards more nutrition-aware consumers with a desire to live healthy lifestyles. The addition of new sources of supply of higher end whey products in the second half of the year had been expected to ease whey pricing, however, the impact of recent drought conditions in the US across the dairy value chain is expected to result in just a modest price weakening in the latter part of the year. Market growth within the customised premix solutions segment in the first half of the year has been strong and indications are that this growth will continue for the remainder of the year. Market demand is driven by customised premix solutions for beverages, breakfast cereals, infant formula product fortification requirements, supplements and nutrition bars.

Dairy Ireland

Dairy Ingredients Ireland: The weaker performance of global dairy markets in the first half, as outlined above, is the key driver of the performance of the Irish Dairy Ingredients business, as substantially all of its dairy output is exported. Expectations for further weakness in global dairy markets in the second half have been adjusted in recent weeks following weather-related milk supply concerns. While the situation continues to evolve and a substantial recovery in prices appears unlikely, the outlook is for a stable market tone in the second half of the year.

Consumer Products: While the Irish food retail environment is showing some degree of stabilisation, particularly from a volume perspective, the market remains fragile and consumers’ focus on price remains the key feature. The outlook for the remainder of the year is satisfactory as the business continues to invest in brand development and operational efficiencies.

Agribusiness: Global dairy markets also indirectly impact the performance of Agribusiness whose core customers are Irish farmers. As a result, demand for key farm inputs was slightly weaker in the first half of the year. The outlook for the remainder of the year remains satisfactory.


Glanbia has completed or is in the process of completing a number of strategic corporate development transactions and capital investment projects, which are consistent with the Group’s growth strategy.

US Cheese
Construction of an US$11 million cheese innovation centre in Idaho has started with completion expected in the first half of 2013. This centre is focused on enhancing new product development and fostering closer relationships with key customers.

Global Nutritionals
In July, Customised Premix Solutions commissioned its new leading edge plant in Germany. This plant enhances the Group’s ability to serve customers in the European, Middle Eastern and African markets and further consolidates Glanbia’s position as a leader in the global customised pre-mix solutions market.

In July, Glanbia announced the acquisition of US based, Aseptic Solutions (“AS”), for a total consideration of US$60 million (€50 million). AS was founded in 2004 and is a manufacturer and co-packer of nutritional and dietary beverages including premium super-fruit drinks, health and energy shots and protein shakes. The business operates from a facility in Corona, California and employs 175 people. The acquisition of AS is aligned with Glanbia’s nutritionals growth strategy and will strengthen Ingredient Technologies by expanding its end-to-end solutions capability as an ingredients supplier, formulator and end product manufacturer.

Ingredient Technologies is currently evaluating a number of options to reinstate its flax manufacturing capability after a processing plant in Canada was destroyed by fire in March. Customer orders are currently being met, with minimal interruption, through the use of contract manufacturers.

Dairy Ireland
The expansion of Dairy Ingredients Ireland’s value-added whey manufacturing capability with a total investment of €21 million is expected to be completed in the second half of the year and this will further enhance the Group’s whey pool.

Recognising the current challenging Irish retail environment, the Yoplait Ireland franchise, which has been held by Consumer Products, was sold back to Yoplait for €18 million cash in the first half of the year. The Consumer Products business will continue to distribute the Yoplait branded products while focusing on ongoing innovation and the development of its core wholly-owned beverage and food brands.

Glanbia Agribusiness has entered into an exclusive, long-term contract with US-based Sturm Foods for supply of milled Irish oats to McCann’s Irish Oatmeal, a premium oatmeal brand in the US market. Sturm Foods is a leading US dry-grocery company and is part of Treehouse Foods Corporation. As a result of the new agreement, Glanbia will expand its existing milling operations in Portlaoise to build a new oats milling facility. Upon completion in 2014, Glanbia will become the sole Irish partner to the McCann’s brand.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.