Glanbia in line for strong earnings

KILKENNY-headquartered Glanbia, the operator of one of the largest dairy processing plants in the world in New Mexico, will deliver strong double-digit earnings growth in 2007.

Earnings per share (EPS) rose 20% in its first six months of trading after a flat first half in 2006.

However, its overseas joint ventures could detract somewhat from the full year’s outturn, the group warned.

But its trading statement, issued in advance of the first-half results due on August 29, said the earnings performance would still be at the upper end of market expectations for the full year.

Glanbia’s shares have been climbing steadily and are up 27% on last year’s high of €3.13 per share.

By early afternoon, its share price was down 2c to €4, having risen marginally in early morning trades.

Davys has upped its earnings forecast to 14.2% for the year form 12.7%.

Goodbody Stockbrokers expect EPS will be 14% and maintains its buy recommendation on the stock.

In the first half, consumer foods, agribusiness and property performed broadly in line with expectations, despite competitive markets.

Food ingredients and the nutrition operations were key drivers of growth delivering a strong performance across the six months. Ingredients struggled in Ireland last year but should do much better this year, off a low base.

The group is the dominant milk and cheese producer here accounting for about one-third of total output in each case.

It enjoyed a very good performance from its US dairy operations.

Those results were also buoyed by a good showing from its latest acquisition, Seltzer, in the US, understood to be performing in line with or ahead of market expectations.

Its purchase last year underlined the drive to shift the focus to products aligned with health and wellness.

Glanbia bought the business for $105 million in October.

Elsewhere it said the increases in raw material prices, due to strong global dairy markets, led to short-term trading pressures in international ventures.

These are situated in Britain, the US and Nigeria and the hike in costs take time to recover in the marketplace.

That setback is temporary and the group expects to rectify it once it puts a new pricing in place to recover the costs.

Chief executive John Moloney has been shifting the group’s strategic focus into key growth areas of the convenience dairy products and a growing range of health and wellness dairy- based drinks and supplements.

“Overall, I am pleased that the group’s growth strategy and spread of business is delivering and the outlook is positive for sustained high growth going forward,” he said.