Glanbia sustains 2010 growth due to steady growth in global dairy sector

GLANBIA, the international nutritionals-to-cheese group, said the growth of 2010 has been sustained into this year and it is sticking to its earlier adjusted earnings per share forecast of 11%-13% for the year on a constant currency basis.

The Kilkenny-based company, which is the biggest cheddar cheese maker in the US with a 19% market share, said: “The positive underlying trends in global dairy and nutritionals sectors experienced in 2010 have continued in 2011.”

Overall, it said the return to profits in 2010 after a difficult 2009 will continue, boosted by the continuing uplift in the world economy — set to grow 4% in 2011.

The group issued its statement ahead of its AGM in Kilkenny yesterday, which drew a modest attendance after the excitement generated last year by the Glanbia Co-op’s efforts to buy back the Irish dairy business from the Plc.

They lost out marginally in that effort and chairman Liam Herlihy, in his opening remarks to the meeting, said it was “unlikely it would be revisited in the medium term”.

The cost to the Plc of the buy out negotiations was €3 million, the group’s finance director Siobhán Talbot informed a shareholder who asked how much the “failed divorce” had cost.

In a question from the floor Tom Clinton, a former IFA president, wondered whether the dividend increase of 10% against a 24% rise in profits made sense given that the co-op arm of the group, which was the majority owner of the Plc, has substantial debts.

Mr Herlihy said the policy on dividends had been “thoroughly thought through” and the board was satisfied with the level of dividend payout.

The cost implications of expanding the milk operations of the group as farmers gear up to produce on average 50% more milk than at present was also broached at the AGM.

Shareholders wanted to know where the cost was going to fall and wondered what level of investment would be required.

Group chief executive John Moloney said that given the size of the task “a lot of work is going on at the moment” to determine the cost implications for all involved in the shift to unrestricted milk production.

This will be the first time in more than 30 years Irish dairy farmers will find themselves in this situation and “overall, it will be positive”, he claimed.

The issue of quotas being broken by some farmers and the cost of policing those breaches were also raised.

Mr Moloney said it did not affect the Plc whose only function was to process the milk.

After the meeting, Mr Moloney welcomed the jobs initiative from the state on Tuesday, but said the dairy sector, even though it was gearing up to produce a lot more milk, was unlikely to generate a high amount of jobs to help the initiative.