Glanbia in Line with Expectations, But Warns on Demand Dip

The International division, which includes Food Ingredients and Nutritionals, is expected to deliver a satisfactory 2008 performance. Demand for cheese in the US has remained strong and the Nutritionals businesses are performing well.

19/11/08 Glanbia plc has said in an interim statement that Glanbia businesses are performing in accordance with the guidance set out in the Group’s 2008 Half-yearly Results Statement of 27 August 2008 and the Board confirms that the 2008 full year results are forecast to be in line with market expectations.

The Irish division, incorporating Consumer Foods and Agribusiness & Property, is trading satisfactorily for the second half of the year and is forecast to deliver a good full year performance. The market environment remains challenging with consumers becoming increasingly value conscious. Ongoing cost improvements and cost recovery in key market segments have improved margins and operating profits.

The International division, which includes Food Ingredients and Nutritionals, is expected to deliver a satisfactory 2008 performance. Demand for cheese in the US has remained strong and the Nutritionals businesses are performing well. Nutritionals will benefit from a first time contribution by Optimum Nutrition, which was acquired in August 2008, and is performing to expectations. Food Ingredients Ireland is experiencing sharp declines in international dairy market prices following the peak of 2007. This decline is expected to be offset by a good performance from the Group’s US operations and global Nutritionals business.

International joint ventures are expected to deliver a significantly improved performance for the full year, when compared with 2007, driven mainly by an excellent performance from Southwest Cheese in the USA.

The Group continues to maintain strong debt/EBITDA and interest cover ratios. The Group’s strong financial position has enabled it to acquire Optimum Nutrition Inc during the period for €256 million and invest approximately €80 million in capital expenditure for the year. While the 2008 year end debt will increase reflecting the above investments the Group continues to generate significant annual cash flow.

The changing global economic environment will have implications for consumer demand and in response to this, together with an ongoing need to remain competitive, the Group is undertaking a significant rationalisation programme across its businesses. The cost of this programme which will be reflected as an exceptional cost in the current year is estimated at €16 million.

The Group will next update the market in its pre close Statement in January 2009.