Glanbia first quarter revenues drop 2.5% on falling milk prices

Revenue at global nutrition group Glanbia fell 2.5% in the opening quarter of the year as dwindling milk prices hit the company’s ingredients sector.

The Kilkenny-headquartered food business issued a trading update for the three months to the beginning of April as it held its annual general meeting.

The company’s shares fell 1.29% on the back of the update which showed the toll falling milk prices are having on its business.

Sales grew by 0.5% in volume terms with acquisitions providing growth of 3.4%.

This was offset by reduced dairy market prices, however, which contributed to overall price decreases of 5.8%.

Despite price pressures, Glanbia Group managing director Siobhán Talbot said she was pleased with the company’s strong overall performance.

“Glanbia delivered a good performance in the first three months of 2016. Our growth platforms of Glanbia performance nutrition and global ingredients delivered volume growth in the first quarter,” Ms Talbot said.

That growth allowed Glanbia to reiterate its 2016 guidance of 8% to 10% growth in adjusted earnings per share at constant currency.

“Our on-going strategy of building a business to deliver better nutrition via consumer brands and high-quality ingredients has mitigated the impact of weak dairy markets.

"The outlook for the remainder of 2016 is positive and we reiterate our full year guidance of adjusted earnings per share growth of 8% to 10% on a constant currency basis.”

Total Group revenue, including joint ventures, declined 2.5% on a reported basis and 3.3% on a constant currency basis.

Its performance nutrition division delivered a strong performance in the first three months of the year with revenues up by more than 5.5% on a constant currency basis.

A 10.1% boost from acquisitions contributed to heavily to the improvement in performance compared with the same period in 2015.

The performance nutrition division, which employs more than 1,500 staff, is a major growth area for the business which is focussed on professional sportspeople and fitness enthusiasts with products such as protein bars and shakes.

Revenue growth in the “mid-single digit range” is expected in the nutrition division.

By comparison, its global ingredients business saw revenues decline 5.2% in the opening three months. The performance of its Irish dairy business was described as “satisfactory” despite revenue falling by 6.2%.

The revenue shortfall was driven by weather-related volume declines of 3% and a fall in prices of 3.6% associated with fertiliser pricing. The company said the full-year outlook for its Dairy Ireland segment was positive with revenues expected to be flat for the year as a whole.

Glanbia’s net debt at the beginning of April was €677m, which represents an increase of €93m versus the net debt position at year end 2015.

The company said this was primarily driven by seasonal working capital requirements. Total 2016 capital expenditure is expected to be between €115m and €125m.


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