Glanbia poised for earnings growth

GLANBIA, the Kilkenny-based international dairy and ingredients group, is forecasting a return to earnings growth for 2010.

In April 2008 the group revised its adjusted Earnings Per Share (EPS) forecast down to 30/31cents per share, back to 2007 levels.

In 2008 it achieved an EPS of 35.9.

NCB Stockbrokers has reiterated its buy endorsement on the grounds that it expects Dairy Ireland will do better than just break even in the year ahead.

“The update and outlook guidance is in line with our expectation and forecasts,” it said.

Shares were up by 1.4% to €2.89 yesterday.

Glanbia said earnings for this year will be between 6 to 8% better than last year.

Based on current economic and dairy market forecasts management said they “expect a return to earnings growth in 2010 in the order of 6% to 8%”.

In April 2009 it revised downwards its EPS for 2009 to 30/31cents per share. This compares with an EPS of 35.9c in 2008 and 30.2c in 2007.

Dealing with last year it said lower US cheese prices weak consumer demand resulted in a difficult year in 2009.

Its US cheese and global nutritionals operations are set to deliver a good result ahead of 2008, it said.

A good performance in nutritionals driven by solid organic growth, new product introductions and the full year effect of the acquisition of Optimum Nutrition in August 2008, more than offset lower US cheese prices.

It warned results from its Irish dairy division, Dairy Ireland, will be considerably lower than 2008.

The global dairy market decline last year created a very difficult environment for the Irish dairy ingredients business while prices and returns for dairy processors and suppliers were below the cost of production.

That resulted in “a major first time loss” in the Irish-based ingredients business for the year, it said.

Glanbia is implementing a further significant cost reduction programme in 2010 in Dairy Ireland.

It has provided a net €15 million, mainly relating to redundancies, to be included in last year’s accounts.

Falling farmer incomes hit the group’s agribusiness division with profits set to be lower than in 2008.

Consumer products will produce a reasonable outturn buoyed by an internal cost reduction programme.

The group’s joint ventures and associates are expected to deliver an improvement in performance in 2009.