Glanbia to cut more workers

GLANBIA has no plans to increase the price it pays for milk as it prepares for more jobs cuts following what it called a difficult six months.

The Kilkenny-based food group yesterday reported a 28% drop to €38 million in pre-tax profits for the six months to the end of June.

Having sought 210 redundancies as part of its cost-saving programme in February, the company said there will be “some” job cuts going forward but refused to give an estimate.

Group managing director John Moloney said that before Glanbia could increase the money it pays to farmers, the milk market would have to recover. He added that no major improvement would occur until next year.

“Milk prices to farmers are low across the world today,” said Mr Moloney.

He said a third of Glanbia’s consumer business is driven by promotions and the company has lost about 2% of its share of the milk market to private label products.

Glanbia’s shares closed down 3.7%, 10c, at €2.60 in Dublin on the back of the news that revenues fell by 14.6% to €944.9m from €1.1 billion. The company’s stock market valuation was €763.24m at yesterday’s close.

Glanbia’s results follow an announcement from Kerry Group on Tuesday that it saw a 4% rise in trading profit for the first half of 2009, despite a 3.2% drop in sales.

The strong performer for Glanbia was their US cheese and global nutritionals arm, which saw profits rise by 52.7% to almost €45m in the first half, while profits in the Irish dairy business dropped 77% to €5.9m – the company’s first loss in this sector for 10 years.

Mr Moloney said: “While we remain cautious in our outlook, we expect the overall rate of decline to moderate in the second half.”

He said this is a year of consolidation for the firm rather than looking for acquisitions.

“As a group we have spent a significant amount of money over the last few years to develop the group outside of Ireland,” he said.

“There’s a lot of existing projects in the works that have to flow through into this year and next year.”

Glanbia said it is “pleased” with the performance of sports-supplement maker Optimum Nutrition, which it bought for $315m (€218m) last year.

Davy analyst, John O’Reilly, said the performance of Glanbia’s US-based businesses is “perhaps the key take-out” from the set of results.

Its “US cheese business is margin stable”, while “Optimum is growing despite the US consumer downturn,” he said.