Glanbia confirms outlook despite Irish economic woes

By Guy Montague-Jones

- Last updated on GMT

Related tags: Milk, Glanbia

Glanbia has reiterated its strong outlook for full year profits despite the poor performance of its US cheese and Irish consumer businesses.

The announcement came in a trading update published alongside the news that the Irish dairy group plans to buy US sports nutrition firm Bio-Engineered Supplements and Nutrition (BSN) for $144m.

Glanbia said the positive numbers from Global Nutritionals and the return to profitability in Irish Dairy Ingredients recorded in the first half of the year continued into the second half. Ahead of the publication of full year results on March 2, the company has therefore reiterated its prediction that 2010 adjusted earnings per share growth will be around 20 per cent.

Finished product struggles

Glanbia made the positive forecast in spite of problems the company is experiencing with its finished dairy product business in Ireland and its business-to-business cheese business in the US.

ithin the Dairy Ireland business unit, Glanbia said overall results for Consumer Products, which include branded milk, cheese and other dairy products, are expected to be lower than 2009.

And in the US, the Irish company expects 2010 operating profits at its cheese business to fall below previous year levels. It said results have been affected by the refurbishment of its Twin Falls cheese plant, higher milk price premiums during the course of the year and a sharp weakening in US cheese prices in the fourth quarter.

Falling prices at the end of the year are also likely to affect Southwest Cheese – a joint venture between Glanbia and the Greater Southwest Agency based in New Mexico. Nevertheless, Glanbia said the business, which underwent a 40 per cent capacity expansion in 2010, is poised to deliver a “solid performance”.

Despite the weaknesses in US cheese and in Consumer Products in Ireland, Glanbia is expecting growth from the wider divisions that the business units they belong to.

Sustained recovery in Irish Dairy Ingredients is predicted to ensure that despite the problems with the Consumer Products business, Dairy Ireland will publish full year operating profits and margins well ahead of 2009 levels.

And volume growth that outpaces the market in Global Nutritionals is expected to ensure that Global Nutritionals and US Cheese delivers higher operating profits in 2010.

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