Big shoes to fill as Talbot takes reins
In Kilkenny this week it was announced that Siobhan Talbot is to succeed the highly regarded John Moloney as managing director of food group Glanbia.
The earlier than expected departure of Mr Moloney may have unsettled the markets slightly, but the welcome for Talbot, a survivor of breast cancer, is genuine. This native of south Kilkenny becomes the first female head of a plc with a turnover in excess of €2bn.
Alongside Maeve Carton, finance director of mighty CRH, she will rank as the most prominent female at the top of an Irish quoted company. Also worthy of mention is Ann Heraty who founded and still runs the recruitment firm CPL plc. This, however, is much smaller in scale.
The MD designate has been with Glanbia since its foundation in 1997, having joined Waterford Foods in 1992. She started her career as a chartered accountant with the leading firm, PriceWaterHouse Cooper, moving with her garda husband, Billy, to the firm’s Sydney office for some time. The pair returned to Ireland around 1990, eventually building a house in south Kilkenny.
In an interview with the Kilkenny People, last year, Siobhan paid tribute to her mother Maura, a national teacher, who was widowed when Siobhan was 15 and her youngest brother two. The family later suffered a big loss when her brother died in an accident. Maura’s resilience in the face of adversity has served to inspire her high-flying daughter.
Talbot has worked closely alongside her predecessor, serving as deputy group finance director from 2005, joining the board in 2009. As chairperson of the Investment Committee, she has played a central part in Glanbia’s growth strategy.
John Moloney will be a particularly hard act to follow, however.
The group’s share price has increased 25-fold since he took over back in 2001 when Glanbia’s very survival was in doubt. This success has brought wealth to many farmer shareholders in the south east enabling them to embark on an ambitious venture aimed at capitalising on the abolition of EU milk quotas in a couple of years.
Following its recent restructuring, Glanbia Plc revenues in 2012 amounted to €2.22bn. These are expected to reach €2.4bn in 2014 on an organic growth basis. However, pretax profits are expected to jump from just under €150m to almost €190m in 2014.
The group has benefited, in particular, from its transformation into a major player in the fast growing, relatively high margin international nutritional foods market.
Last year, John Mullane of Dolmen Securities (now Cantor Fitzgerald) predicted that the group’s global nutritionals division would make up just over 70% of earnings by 2016.
The restructuring and effective hiving off of the domestic dairy ingredients business has smoothed the path to international expansion for the revamped plc.
Moloney has radically reshaped Glanbia since 2001 when it was regarded as a basket case, an organisation split between internal factions.
The merger between Waterford Foods and Avonmore appeared to be hitting the sands, with the merged entity heavily dependent on low margin business.
“The strategy of going after commodity dairy in the UK and US simply wasn’t working,” says Liam Igoe, agribusiness analyst with Goodbody Stockbrokers.
Glanbia produced whey, a byproduct of cheese. The group decided to slowly build up this part of the business while simultaneously selling off businesses, particularly in the UK, in liquid milk and cheese.
Glanbia simply cut its losses.
It was a long hard slog. The whey operation grew out of a cheese plant in Idaho, US. The group looked for additional end uses. This brought it into the gym user, muscle builder market — a long way from the supply of cartons of milk and soup with which Glanbia and its predecessors was associated.
In the mid Noughties, Glanbia acquired Optimal Nutrition. This was a big move into performance nutrition.
By then, it had built up expertise in business to business ingredients supply.
Today, over 40% of sales are generated in the US where many of the group’s activities are based and almost three quarters of earnings are generated by the global ingredients and performance nutritionals businesses, built up over the past decade. Performance nutrition accounts for $600m in revenues alone.
The emphasis is on global expansion, with Asia seen as offering particular scope.
According to Davy Stockbrokers, “performance nutrition is replicating its US success in new regions, with 30% of sales coming outside the US”. It believes that with Glanbia’s vertically integrated structure, it is well placed to capitalise on the growth in nutri foods worldwide. This year, the focus is on organic expansion, with €130m in capital expenditure planned.
The incoming MD will well understand the dilemma that one David Moyes is faced with, one summed up by the exhortation “Match that!”
In Liam Igoe’s view, managing growth can be pretty challenging, particularly when you are heading up a group with four businesses that are hungry for capital and keen on global expansion. At least, the balance sheet is in good shape with debt to EBITDA (earnings before interest tax and depreciation) at just under two times, slated to fall to 1.4 times by 2014, barring acquisitions.
He believes that Talbot will take time out to consider the options.
The MD designate has been involved in all the major acquisitions of recent years so she is hardly coming cold to the task at hand.
In an interview conducted by email, Talbot points to the current economic environment, global and Irish, as posing the greatest challenge to the group.
“Glanbia has addressed this. We have very strong brands. We are very aligned with how trends are emerging. We will continue to execute the Glanbia strategy which is to become the leading global nutritional solutions and cheese group,” she says.
The group has no plans to change its dual Dublin and London listing. “We are comfortable with the joint venture model and have a number of very successful joint ventures, such as SW Cheese in the US and Nutracima in Nigeria. In Ireland we have become a shareholder in GIIL (Glanbia Ingredients Ireland Ltd) in partnership with Glanbia Society (the co-op),” Talbot says.
When asked to cite role models, she name checks her predecessor. “John Moloney is fantastic. He has been my mentor for the past decade.”
A farmer’s daughter, she expresses confidence in the ability of the sector to archive ambitious goals set by Government for 2020. “While very conscious of the recent challenges, we fundamentally believe in the long term opportunities for the sector and that farmers will be ready for these. Ireland has some of the best dairy farmers in the world along with a strong competitive advantage that will serve us well.”
Hopefully, she can help to bridge the traditional gap between producer and processor so apparent in the debate over milk prices.
As for personal consumption, she opts for the Optimium Nutrition Opti Women range while her children are keen imbibers of Avonmore super milk.
Co Kilkenny.
Mercy Convent, Carrick on Suir. UCD. B-Comm. Qualified as chartered accountant.
1985: Joined Price Waterhouse. Moved to work in Sydney. 1992: Joined Waterford Foods to take up finance role. 1997: Merger of Waterford Foods & Avonmore Foods to form Glanbia. 2005-9: Deputy finance director.2009-13: Group finance director. 2009 to date: Board member. 2013: Managing director designate, takes over in November.
Married to Billy Talbot, a retired garda. Two children.
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