Glanbia Board Recommend Joint Venture After Interim Results at Upper End of Guidance

Commenting today, John Moloney, Group Managing Director said: "The Group continues to perform well driven by positive overall trends in Global Nutritionals and results broadly in line with expectations elsewhere in the business. We are confident that full year results will be at the upper end of guidance, representing circa 10% growth in adjusted earnings per share on a constant currency basis. 2012 is expected to build on the excellent performance of Glanbia in the last two years and reflects both our successful international growth strategy and strong operational execution across the Group."

 

A key project this year has been reaching agreement on the proposed Irish dairy processing Joint Venture with Glanbia Co-operative Society, our majority shareholder. This transaction offers a new model for post quota growth for Glanbia milk suppliers and underpins a potential 60% expansion of our Irish dairy processing capacity. Voting to approve the transaction will take place in the coming weeks, with a strong 'yes' recommendation from the Glanbia Board.I believe this is the best route to deliver the next phase of growth in both our Irish and international businesses and to create further value for shareholders, including Glanbia Co-operative Society."

 

In the first half, milk supply outpaced good demand from emerging markets and global dairy market prices declined to the middle of the year, compared with strong prices in 2011. Growing concerns about the US drought and its impact on milk production that emerged in the third quarter reversed this price decline in recent weeks. For the remainder of the year, greater price stability is expected in a balanced market with good supply and demand characteristics and the outlook is broadly positive to year end. 

 

Total Group revenue including Joint Ventures & Associates to 29 September 2012 grew marginally when compared with the prior year as growth in the Global Nutritionals businesses was offset by a decline in revenue in the Dairy Ireland business segment. Group operating profit and margins for the first nine months were ahead of prior year underpinning the expected delivery of circa 10% growth in adjusted earnings per share for the full year 2012.

 

Revenue for Dairy Ireland to 29 September 2012 declined 4% relative to 2011, largely driven by lower revenue in Dairy Ingredients Ireland which in turn reflected a combination of lower dairy markets and lower volumes in the period. Despite this, a solid performance is expected for the full year in Dairy Ingredients Ireland. Consumer Products and Agribusiness performed in line with expectations. While 2012 revenues for Dairy Ireland are anticipated to be lower, overall profit performance is expected to be just marginally behind 2011, representing a good result in the current market environment.

 

Revenues for Joint Ventures & Associates for the first nine months of 2012 are behind prior year as volume growth in Southwest Cheese and Glanbia Cheese was offset by impact of lower cheese prices. While profits in Southwest Cheese are ahead of prior year, this is more than offset by the impact of higher milk input costs within Glanbia Cheese. As a result, the Group's share of profit after tax for Joint Ventures & Associates for 2012 is expected to be below the prior year.

 

The Group has signed an agreement with Glanbia Co-operative Society, its majority shareholder, to enter into a 40% (Glanbia): 60% (Society) Joint Venture in respect of its Irish dairy processing operations. This transaction is well advanced and is now at the stage of both Society and plc shareholder approval. Society members are scheduled to vote on 13 November with a simple majority required for approval. The meeting of plc shareholders is scheduled for 20 November.