Acquisitions likely for Glanbia after good results

Glanbia will continue to seek acquisition opportunities in the coming year, particularly around its global nutrition business as that key segment becomes increasingly central to its growth.

The Irish ingredients and dairy company will continue to monitor available growth opportunities as they present themselves in the market, group managing director, Siobhán Talbot said as the firm released strong full-year results yesterday.

Group revenue grew 7.3% to €3.52bn while earnings rose more than 8% to €245m. Profit for the year climbed to €161.2m with adjusted earnings per share rising 10.1% — an increase which represents the fifth consecutive year of double digit growth for the company.

A final dividend of 6.57c per share has been recommended by the Glanbia board, up from 5.97c per share in 2013.

The company’s global nutrition business constitutes one of its two key growth drivers, Ms Talbot said yesterday.

“Our focus on two scale growth platforms, global performance nutrition and global ingredients, continues to drive earnings as we leverage our market leadership and sector expertise. In performance nutrition and global ingredients, continues to drive earnings as we leverage our market leadership and sector expertise,” Ms Talbot said.

Glanbia’s largest business by revenue, global ingredients, delivered flat earnings before interest, tax, depreciation and amortisation growth at €102m as volume growth was offset by margin weakness with operating margins falling from 9.5% to 8.5%.

The company is hopeful of further margin progression in its global nutrition business, Ms Talbot said, indicating that good savings have been achieved in the previous year.

A major €120m capital investment programme in organic growth within the business will also be instigated in the coming months while debt financing of €250m is available to Glanbia for further acquisitions following on from its purchase last year of US-based sports nutrition company Isopure.

If acquisition opportunities that presented significant value emerged during 2015, the Glanbia chief said the company would be interested in expanding their portfolio and was confident shareholders would support such a move.

The Dairy Ireland division delivered strong profit growth, driven mainly by consumer products.

Glanbia will also look for a further €12m in savings from the division this year.

Ms Talbot dismissed the prospect of disposing of its Irish dairy business which has had tough times until recently, saying no change to the current structure of the business was in the pipeline.

With the abolition of EU milk quotas coming down the tracks in April, the Glanbia managing director said she anticipated supply growth of about 15% and said the company would work to mitigate price volatility. The group ended 2015 with net debt of €510m compared to €374m at the end of 2013. The company’s interest coverage was much better than expected as a result of improved cashflow, however, analysts said yesterday.