Glanbia on Hunt for Acquisitions to Bolster Ingredients Unit

24 Feb 2016 --- Profits have jumped 26 percent at global ingredients and nutrition group Glanbia over the year, as the company looks for fresh tie-ups and acquisitions to bolster its ingredients arm. Pre-tax profits were up from €174 million ($191 million) to €219 million ($241 million) in 2015 while revenues lifted from €2.5 billion ($2.7 billion) to €2.8 billion ($3.1 billion).

The lift in profits was driven by a strong year for its Global Performance Nutrition unit and a recovery of its Irish dairy business.

But tumbling milk prices impacted Glanbia’s Global Ingredients unit, which is the biggest part of the Glanbia business.

However, the company’s chief executive Siobhan Talbot said it was now on the acquisition hunt to help improve its performance.

She said: “The development of our ingredients business I think encompasses both organic projects and acquisitions and we remain interested in either acquiring or partnering with businesses that will add to our strategic growth agenda.”

Revenues at its Global Performance Nutrition Unit were up 6.7 percent to €923 million while margins were also significantly up, helped by improved branded product mix and raw material price deflation.

Glanbia said its portfolio of products, which include Protein Milk and Optimum Nutrition, had broad consumer appeal beyond fitness fanatics.

Talbot said that its nutrition products tapped into many of the big current consumer trends, such as health and wellness; clear-labelling and those wanting an active lifestyle.

The US market was a strong performer, due to some “channel distribution gains,” the company said.

But falling milk prices dented Glanbia’s Global Ingredients unit.

On a conference call, Talbot said: “We had good volume growth within global ingredients as we ran our facilities as close to full capacity but clearly pricing was impacted by the very significant decline in global dairy markets with pricing overall down 17.8 per cent.”

Talbot pointed to the example of cheese prices being down 25 percent between 2015 and 1014.

She added: “The results demonstrate the resilience and diversification of the Glanbia model during a difficult year for dairy markets” but added that its Irish dairy business was showing a stronger performance.

Revenues at its Dairy Ireland business were up from €616 million ($677 million) to €633 million ($696 million) while EBITA (earnings before interest, tax and amortisation) was up from €19 million ($21 million) to €29 million ($33 million).

Dairy Ireland’s revenues was helped by increased volume sales helping offset lower pricing.

Talbot added: “Our unique portfolio of performance nutrition brands and nutritional ingredients are right at the heart of emerging growth opportunities. The outlook for 2016 is positive and we are guiding 8pc to 10pc growth in adjusted earnings per share, constant currency.”