Glanbia: Costs keep agri-business margins low

Despite the agriculture sector booming in Ireland, there remains very little margin in the agri-business sector, according to Glanbia’s latest financials, due to the cost of materials.

The report noted that the agri-business sector had achieved modest growth but was operating in a very challenging market. “Agri-business revenue growth was positive as higher feed pricing and volumes offset revenue declines in the fertiliser and retail categories. EBITA (earnings before the deduction of interest, tax and amortisation expenses) margins were lower, mainly due to input cost pressures and a change in the business mix,” the report stated.

The sector only achieved growth as farmers were dependent on buying feed due to the poor weather but the profit from feed was offset by losses on fertiliser. “Poor weather conditions resulted in increased demand for feed but this was offset by lower demand for fertiliser. Higher input cost prices in both of these product categories contributed to margin pressure across the sector in 2012,” the report said.