Glanbia has made its first appearance in an annual review by Rabobank which ranks the revenue performance of the world’s biggest dairy companies and cooperatives.
Rabobank’s annual Global Dairy Top 20 report, published today (Tuesday, August 29), shows that Lactalis, part of the French family owned group, was the top-performing dairy company in 2022.
The latest report also reflects last year’s different dynamics including war-driven inflation pushing dairy prices in some countries to “new annual average highs”, lower than expected milk production growth in some regions and also the impact of large farm input costs.
According to dairy analyst at Rabobank, Richard Scheper, most “turnover gains were absorbed by exploding costs” which were clearly evident on many companies’ bottom lines.
Scheper said: “Many dairy companies paid record-high average farmgate milk prices to offset large farm input costs.
“At the factory gate, rising energy costs and the availability of natural gas – especially in Europe – were the largest concerns for energy-intensive dairy processing.
“Costs for other components, such as logistics, packaging materials, and labour, also escalated in 2022.”
The latest Global Dairy Top 20 report shows that the US co-op, Dairy Farmers of America, claimed second place in the listings while Nestlé settled into third place, based on revenue performance – “turnover data in the report is predominately dairy-sales based on 2022 financials” according to Rabobank.
According to Scheper the strength of the US dollar was a key factor when it came to which companies and co-ops rose to the top of the listings.
“For non-US-based dairy companies, turnover gains in local currencies were partly or even largely offset by the stronger US dollar, giving rise to position changes along the entire list and contributing to the entrance of Ireland-based Glanbia.
“The majority of Glanbia’s revenues are derived from sales in the US and the company,” he added.
In the report Rabobank details that Glanbia’s estimated dairy revenue rose by “an impressive” €1.3 billion to €4.8 billion.
“The company benefitted from increasing sales in US dollar while cheese and nutritional products are the main segments for the company,” it stated.
Rabobank highlighted that Glanbia had “formalised its split” with Glanbia Ireland in 2022 by selling 40% of its shareholding to Glanbia Co-Operative Society and that the dairy business, including the co-op had rebranded to Tirlán.
In general in 2022, according to the bank, there was roughly the same merger and acquisition rate in the global dairy industry last year compared with 2021.
But this has slowed in the first half of 2023 and Rabobank has also forecast that it will be a “challenging year in terms of profitability” for some of those included in the latest list.
“Farmgate prices remain relatively high in some regions which squeezed margins in the first half of 2023.
“In terms of turnover we expect more muted growth in 2023 with some companies unlikely to match the double-digit percentage revenue gains they experienced in 2022,” Rabobank stated.