Home market and ingredients division returns hit Glanbia as debt rises

The Glanbia Global Ingredients division recorded a revenue decline in the first three months of 2016 of 5.2%, while revenues in its Dairy Ireland division were down 6.2%.

In its interim statement, issued today, Glanbia said it delivered good first quarter performance, reiterating its 2016 guidance of 8%-10% growth in adjusted earnings per share (constant currency). Its net debt is up €93m, at €677m.

Its Global Ingredients division saw volumes grew by 1.5% and these were offset by continued challenges in dairy markets causing price declines of 6.7%.

Volume growth was mainly driven by high-end whey ingredient sales as a result of the strategic investment in additional capacity which was commissioned at the end of 2015.

Its Dairy Ireland division, it says, delivered a satisfactory performance in the first three months of the year.

Revenues in the period declined by 6.2%, which was driven by weather related volume declines of 3.0%, combined with a price decline of 3.6% largely associated with declines in fertiliser pricing.

Its results go on to say that the full year 2016 outlook for Dairy Ireland is positive with further EBITA margin progression expected on flat revenues versus 2015. This improved performance is being driven by innovation, cost control and returns from strategic investments made in prior years, Glanbia says.

Commenting today, Siobhán Talbot, Group Managing Director said: “Glanbia delivered a good performance in the first three months of 2016. Our growth platforms of Glanbia Performance Nutrition and Global Ingredients delivered volume growth in the first quarter.

“Our on-going strategy of building a business to deliver better nutrition via consumer brands and high-quality ingredients has mitigated the impact of weak dairy markets. 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.”

Glanbia Performance

In the three months to April 2, 2016, wholly owned revenue declined 0.8% on a reported basis and was down 1.9% on a constant currency basis when compared to the same period in 2015.

This was driven by volume growth of 0.5%, contribution from acquisitions of 3.4% offset by price declines of 5.8% primarily associated with reduced dairy market prices. Total Group Revenue, including Joint Ventures and Associates, declined 2.5% on a reported basis and 3.3% on a constant currency basis.

In its Glanbia Performance Nutrition delivered a good performance in the first three months of the year when compared against the same period in 2015.

Revenues increased 5.6%, driven by a 10.1% increase from acquisitions, a 2.0% increase in volume offset by a 6.5% price decrease. Branded volume growth was strong in the US market in the first quarter of 2016.

Overall volume growth was offset by challenges in certain non US markets associated with a strong US dollar and geo-political issues as well as further declines in contract volumes. The margin profile achieved in the second half of 2015 has continued into 2016 notwithstanding on-going investment in branded activity, it says.

For full year 2016, Glanbia expects to deliver adjusted earnings per share growth of 8% to 10% on a constant currency basis.