Glanbia aims to boost growth
Merrion Stockbrokers analyst Niamh Brodie said, following a pre-closed period conversation with management, they understand that Glanbia has seen solid trading in the second half of 2003.
"Due to a pick-up in dairy ingredients markets, we believe the company is likely to deliver earnings at, or marginally ahead of, our current estimate of 18.8c norm EPS, which equates to 8% growth.
"We remain comfortable with our 4-5% EPS growth forecast for 2004," she said.
Ms Brodie said Glanbia's chilled foods operation continued to perform well in the second half.
"Innovation and new product launches in areas such as flavoured milk are planned to maintain momentum in 2004," she added.
Merrion are comfortable with the expectation of 148m net debt for the end of the year, down from 176 at the end of 2002.
"Regarding future investment, the company is actively looking at a number of companies involved in nutrition it is primarily interested in emerging stage companies.
"Such acquisitions may not be immediately earnings accretive, but they would aid the company's strategic move into higher value-add growth sectors of the dairy industry," she said.
Ms Brodie said during 2004, Glanbia will face tough negotiations with suppliers for both chilled foods and dairy ingredients, as the medium-term review will have an impact on product prices from July and pricing will need to reflect the impact of exchange rate movements.
"The market environment for the ingredients division in the second half has improved. In the US, the company was managing the margin in the first half of the year to compensate for tough pricing in dairy ingredients and cheese, both of which saw better pricing in the second half."
