8% rise in profits for Glanbia
The former dairy, which includes Yoplait, Kilmeaden cheese and Avonmore amongst its brands, yesterday reported 8% growth in pre-tax profits for 2002 to just under €72 million.
John Moloney said in the context of the mid-term review of the Common Agricultural Policy, scales would have to be improved.
Businesses would have to be integrated completely and individual boards would have to reflect on how to do this.
The dairy industry is set for a major shakeup with the completion of the Government strategy document on how to maintain competitiveness due in the next week.
A merger of the three top players Glanbia, Kerry and Dairygold into one giant milk processor is expected to be among the report's recommendations. Mr Moloney said Glanbia was looking at consolidation.
"It could be done from a combination of traditional mergers, acquisitions or joint ventures," Mr Moloney said. He gave the example of sharing drying plants when it did not make sense to build new ones.
The dividend for the year will be 4.76 cent, up 5% on last year, while adjusted earnings per share (EPS) rose 10% to 17.44 cent.
Analysts welcomed the results in a challenging year for the dairy sector. Davy Stockbroker analyst John O'Reilly said the EPS should be well regarded in a trading year which was anything but easy.
The scope for investment spending, the key driver of future growth had risen, Mr O'Reilly said and he expects growth of 6-7% next year.
Glanbia generated a 1.8% slip in operating profit of €91.54 million on a 11.8% decline in turnover to €2.316 billion.
The operating margin improved 0.3% to 3.9%. Profit before tax and exceptional charges grew 7.8% to €71.81 million, mainly due to lower borrowings and interest costs.
Net borrowings stood at €176 million at year-end compared with €242.7 million at the end of 2001.
Glanbia booked a €68m exceptional charge on the closure of its British consumer meats business Cookes and another exceptional charge of €25.6 million for the sale of its British foodservice distribution.
The consumer products division drove profitability, accounting for more than half of total operating profit at €47.6m.
This was despite a 13% drop in turnover. On milk prices to farmers, Mr Moloney said there would have to be cuts unless circumstances changed between now and April.
"If nothing changes, there will have to be some adjustment in price. We have supported milk for about €9-10 million over the past year. That is not sustainable."
