Glanbia’s ingredients business reports 14% revenue decline

Glanbia’s Global Ingredients (GI) recorded a revenue decline in the first nine months of 2015 of 14.3%, according to the Groups interim management statement, released this morning (Wednesday).

Glanbia says the decline was predominantly a result of weaker dairy market pricing with US Cheese being the main driver.

In the first nine months of the year, GI recorded volume growth of 3.6% which was offset by a pricing decline of 17.9%.

In the nine months to October 3, 2015, total Group revenue, including Joint Ventures and Associates, was up 3.2% on a reported basis and declined 9.0% on a constant currency basis.

Wholly owned revenue was up 9.0% on a reported basis and declined 4.9% on a constant currency basis when compared to the same period in 2014.

Commenting today, Siobhán Talbot, Group Managing Director said Glanbia delivered a good performance in the first nine months of 2015.

“Reported revenues were up 9.0% in our wholly-owned business when compared to the same period last year and this was driven mainly by Global Performance Nutrition.

“The outlook for the remainder of 2015 is positive and we reiterate our full-year guidance of adjusted earnings per share growth of 9% to 11% on a constant currency basis with a reported result of circa 25% if exchange rates remain at current levels for the rest of the year,” she said.

Outlook

The full year 2015 outlook is for Glanbia to deliver adjusted earnings per share growth of 9% to 11% on a constant currency basis and circa 25% on a reported basis if the euro-US dollar exchange rate remains at current levels to the end of the year.

Foreign exchange

Glanbia generates a significant proportion of its earnings in US dollars and reports in Euro. Constant currency reporting is used to eliminate the translational effect of foreign exchange on the Group’s results.

The average euro-US dollar exchange rate for the first nine months of 2014 was $1.35 compared to an average rate of $1.11 for the first nine months of 2015 leading to an improved reported result when compared to constant currency.

According to the Glanbia statement, if the Euro-US dollar exchange rate remains at current levels for the full year Glanbia expects 2015 adjusted earnings per share growth of close to 25% on a reported basis.

Global Performance Nutrition (constant currency)

In its statement Glanbia said its Global Performance Nutrition delivered a good performance in the first nine months of the year when compared against the same period in 2014.

Revenues increased 3.8% driven by an 8.8% increase from acquisitions offset by a 1.1% price decrease and a 3.9% volume decline related to lower contract manufacturing business and specific challenges in certain markets.

Dairy Ireland

Glanbia also says Dairy Ireland delivered a good performance in the first nine months of the year.

Revenues in the period grew by 4.1% as a combination of volume growth of 3.5% and acquisitions which delivered 1.0%, was offset by a slight price decline of 0.4%.

The full year 2015 outlook is positive with revenue growth and margin recovery versus prior year expected as the business benefits from continued cost improvements accompanied by the growth in sales of value-added branded milk in Ireland.

Joint Ventures & Associates (constant currency)

Revenues from Joint Ventures & Associates declined 19.7% relative to 2014 as significantly lower dairy markets reduced pricing year on year by 19.4%, according to the Glanbia statement.

It says the disposal of Nutricima reduced revenue by 1.1%.

Meanwhile, volume growth of 0.8% was driven entirely by Glanbia Ingredients Ireland.

Overall full year performance from Joint Ventures & Associates is expected to be broadly in line with 2014 as reduced revenues are offset by on-going efficiency programmes across the businesses.

Expansion

Glanbia also announced that it is in advanced discussions, with its US joint venture partner at South West Cheese, to expand cheese and whey production at its facility in New Mexico by 25%.

The project is expected to take over two years to complete at an approximate cost of $140m.