Glanbia on course to deliver earnings growth of 8-10%

Glanbia plc expects to deliver adjusted earnings per share growth of 8% to 10% on a constant currency basis for full year 2016, the Group has announced.

Total Group revenue for the first nine months of the year declined 0.4% on a reported basis and grew 0.2% on a constant currency basis, according to its third quarter interim management statement.

In the nine months to October 1, 2016, Glanbia’s wholly owned revenue increased 2.0% on a reported basis and was up 2.4% on a constant currency basis when compared to the same period in 2015.

On a constant currency basis, the Group said this was driven by volume growth of 3.9% and a contribution from acquisitions of 3.6%, offset by price declines of 5.1% primarily associated with reduced dairy market prices and brand investment.

Glanbia Performance Nutrition (constant currency)

Glanbia Performance Nutrition (‘GPN’) delivered a good performance in the first nine months of the year when compared against the same period in 2015, with a 10.9% increase in revenue.

This growth is attributed to a strong volume increase of 5.6%, with growth across all regions demonstrating the continued healthy consumer franchise for GPN’s brands.

In addition, the thinkThin acquisition contributed 10.9% of overall GPN revenue growth, the Group said.

As expected, the competitive landscape in the US was challenging in quarter three and GPN expects full year like-for-like branded revenue growth in the low-single digits with strong volume growth offset by brand investment.

The full year 2016 outlook for GPN is positive with strong year-on-year EBITA growth expected.

Glanbia Nutritionals (constant currency)

Glanbia Nutritionals (‘GN’) delivered a satisfactory performance in the first nine months of 2016 with a good third quarter reported.

Revenue declined in the period by 0.8% as volume growth of 3.9% was offset by a price decline of 4.7%, which the Group said reflects lower dairy market pricing.

Volume growth was mainly driven by value-added dairy nutritional ingredient sales including systems and high-end whey.

Dairy market pricing remained at relatively low levels in the first half of 2016 with some price recovery taking place in the third quarter.

The full year 2016 outlook for GN is for delivery of EBITA and margin improvement versus 2015 due to growth of both dairy and non-dairy value-added nutritional ingredient sales.

Dairy Ireland

Meanwhile, Glanbia said that Dairy Ireland delivered a satisfactory performance in the first nine months of the year, but revenue in the period declined by 3.3%.

It said this was driven by a price decline of 5.3% as a result of reduced input prices, offset by a volume increase of 1.7% and a small bolt on acquisition contributing 0.4% to revenue in the period.

Volume growth was mainly driven by improved value-added branded milk, fertiliser and animal feed sales versus the same period in 2015.

Joint Ventures & Associates (constant currency)

Revenue from Joint Ventures & Associates declined 6.6% in the first nine months of 2016 versus prior year.

This was driven by a price decline of 10.3%, as a result of reduced dairy markets, offset by volume growth of 5.3%, largely associated with increased milk processed in Glanbia Ingredients Ireland, the Group said.

The impact of the Nutricima disposal in April 2015 further reduced revenue by 1.6% in the period.

The full year 2016 outlook expected for Dairy Ireland and Joint Ventures & Associates is for delivery of moderate EBITA improvement on 2015.

Financing

Glanbia’s net debt at October 1, 2016 was €626m, which represents a decrease of €18m versus the net debt position at half year 2016.

The full year 2016 net debt to adjusted EBITDA ratio is expected be below 1.5 times based on current business activity. Total full year 2016 capital expenditure is expected to be between €100m and €110m.

Commenting today, Siobhán Talbot, Group Managing Director said that Glanbia delivered a good performance in the first nine months of 2016.

“On a constant currency basis wholly owned revenues grew by 2.4% versus the same period in 2015.”

All segments of the Group delivered volume growth in the period as we continue to invest in developing our portfolio of brands and value-added ingredients to benefit from the long term consumer trends in nutrition.

“The outlook for the remainder of 2016 is positive and we reiterate our full year guidance of adjusted earnings per share growth of 8% to 10% on a constant currency basis.”