Glanbia predicts earnings boost

GLANBIA, the leading supplier of mozzarella cheese in Europe, has confirmed its first-half figures will show a strong improvement over the same period last year.

The results will be in line with earlier indications which forecast a boost of about 15% in earnings for 2010.

The Kilkenny-based global nutritional and cheese group said the improved outlook reflects a much better position for the Irish dairy business that lost an estimated €18m last year.

In its pre-close trading statement for the half year ended July 3, 2010, Glanbia said the group is on track for a very strong first-half performance due to the return to profitability by the Irish Dairy Ingredients operations.

Glanbia said the Irish dairy business benefited from “a sustained improvement in global dairy markets throughout the first six months of 2010”.

Consumer Products did not have it so good and endured a very tough first half in 2010, as the Irish retail environment remained “extremely competitive and operating margins in this business in the first half were impacted by higher milk costs and the effects of price reductions implemented at wholesale level in the second half of 2009”.

Elsewhere it said strong demand in the US helped its US cheese and nutritional’s businesses, while its international joint ventures in the US, UK and Nigeria also had a strong first half.

As a result of the generally improved market environment the group said trading was in line with expectations. Its first-half results will be announced in late August.

Agribusiness had a satisfactory first half performance while the implementation of the 2010 rationalisation programme across the Dairy Ireland businesses is going according to plan.

NCB Stockbrokers said the up-date confirmed earlier indications that the results this year will be well up on last year.

They expect EPS to increase 15% to 35c in 2010, in line with company guidance of mid-teen earnings growth. They added turnaround in Irish dairy ingredients and positive market trends in the US businesses should offset any weakness in Irish consumer products.

“At the current share price Glanbia is trading on a 2010 PE of 8.9x. We reiterate our buy recommendation,” said NCB.