Glanbia discusses post-quota approach

Glanbia Plc will not be in position to announce its plans to handle the increased milk production after the EU milk quota system ends in 2015 until the end of June.

It is negotiating the best way forward with Glanbia Co-op, which owns 53% of the company, and others, according to group managing director John Moloney.

Attempts to find a solution on how to proceed is ongoing. Key to a successful resolution of the problems associated with it is unlocking the potential in the €1bn worth of shares that the co-op owns in the Plc.

The good news for Glanbia Plc investors yesterday at the AGM in Kilkenny was that thanks to forward pricing and recession resistance, pizza chains and fast food outlets such McDonald’s, which uses Glanbia ingredients, profits are stable and the outlook for the year is good despite worsening trading conditions.

However, dairy prices are set to fall because of the very mild winters experienced in all milk-producing regions over the past eight months, including Ireland. He said the group was on course for growth in adjusted earnings of between 5% and 7% for 2012.

He said that while dairy prices would come down on a short-term basis due to mild weather, the underlying trend was for growth.

He said 94% of milk produced was used in the country of origin and that this left counties such as Ireland and New Zealand in a strong position to exploit the continuing increase in consumption of dairy products globally year on year of between 1.5% and 2%.

He said he hoped the company could double its turnover in Asia, including China, from €160m.

On the EU fiscal treaty, he said that a no vote would affect Irish companies’ ability to sell goods to the 400m-strong consumer base in the EU and that it would also send out poor signal to investors who wanted to come into Ireland.