Pre-tax profits fall 19% after ‘challenging year’

INTERNATIONAL food group Glanbia has reported a fall in pre-tax profits of 19% to €97.4 million from €120.3m.

Covering the year 2009, yesterday’s figures show total sales fell by 18% from €2.2 billion to €1.83bn.

The figures reflect a challenging environment in the international dairy markets, the group said.

A final dividend of 3.95 cent per share has been declared, representing an increase of 5% on 3.76c final paid in 2008 and makes a total dividend of 6.84%.

Shares in the group closed down 2.7% to €2.53, well off this year’s high of €2.89. At their peak in 2007, the shares hit €5.08.

Group chief executive John Moloney described the results in what was an “unprecedented year for the dairy industry.”

Faced with a global recession, he said the group’s nutritional markets proved “very resilient” while the sharp decline in the global dairy sector crated “the perfect storm” across the industry.

Dairy prices suffered a sharp fall, staying at very low levels globally until the last quarter of 2009.

Cost reductions played a part in the group’s performance, it emerged, following the loss of 230 jobs in Ireland last year which led to savings of €10m.

A further 200 jobs will be axed this year.

In the US, Glanbia’s 40% expansion of Southwest Cheese is on track and will deliver 150,000 tonnes of cheddar cheese annually at full capacity, which is more than the total cheese production of the Irish dairy sector.

That level of output will consolidate Glanbia’s position as the biggest producer of cheddar cheese in the US.

The group said the fall in its results overall was contained by the “strong performance” of its global nutritionals business, a resilient performance by its US cheese division as well as the cost reductions delivered in 2009.

Overall, margins improved by 10 basis points during the year despite the fall in demand globally.

Glanbia’s Dairy Ireland operations saw its sales fall 23.3% to €1.028bn while operating profits slumped 52% to €24m.

The US cheese and global nutritionals business saw a 6% decline in revenues to €792.4m, but operating profits rose by 7.4% to €90m.

The global nutritionals business had a strong year, which the company said showed its resilience against the global economic recession.

Revenues from its joint ventures and associates division fell by almost 20% to €297.6m, while operating profits rose by 2.4% to €17.4m.

“And while the outlook remains challenging, we are seeing some positive signs in our operating environment which should underpin our performance in 2010,” Mr Moloney added.