Glanbia on target for double digit profit growth

By Guy Montague-Jones

- Last updated on GMT

Related tags: Glanbia, Milk

Glanbia is standing by its double digit profit forecast for 2011 after an encouraging start to the year that saw the company reap the rewards of higher global dairy and nutritional prices.

Giving an update on the group performance for January to May, Glanbia said the positive trends seen in 2010 continued into the current year.

It has therefore decided to stick with its full year forecast of an 11 to 13 per cent increase in earnings per share.

But NCB Stockbrokers suggested in a note that Glanbia could increase its guidance at some point this year. It said: “We believe Glanbia is a major beneficiary of rising global dairy commodity and nutritional prices and believe that company guidance will rise to reflect this buoyancy as the year progresses.”

Business performance

In the dairy market, Glanbia said its ingredients business has been a particularly strong performer.

“Current global dairy market conditions and higher milk volumes support a good performance in Dairy Ingredients Ireland in the year to date; although there has been some weakening in market outlook in recent weeks.”

And the nutritionals business has also been performing well, supported by higher volumes and the acquisition of BSN last year.

Meanwhile, the weak spot continues to be the Irish finished products business, weighed down by the weak economy and higher input costs. To remedy the situation Glanbia said it continues to work on costs and price increases at wholesale level.

But overall NCB Stockbrokers said the balance of the company in favour of nutritional ingredients now means that the problems at the Irish consumer business have a limited impact on earnings.

“Post the acquisition of BSN, Glanbia now generates 70 per cent of its earnings from US cheese and nutritionals which significantly enhances the quality of its earnings and reduces its dependency on Ireland and offsets the weakness in the consumer foods division.”

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