Glanbia Q1 revenues up due to strong dollar
This solid performance was achieved against a weakness in global milk prices and a dip in US cheese and dairy sales. The group’s annual earning projections, issued at its AGM in Kilkenny, have been met with a positive response from industry analysts.
Analysts at Davy stated: “Our full year guidance is reiterated, ie constant currency-adjusted earnings per share growth of 9% to 11%. We are leaving our 73.5c earnings per share forecast unchanged (+21% year on year), and at first glance we would expect to make only minor changes to the underlying divisional mix.”
Davy noted that, ex-acquisitions, Glanbia’s revenues declined 5.8% against the 38% increase last year. This primarily related to the anticipated sharp fall in contract manufacturing (private label) demand year-on-year off an inflated prior-year base.
“Branded revenues, ex-acquisitions, were broadly in line with last year as renewed growth in the US was offset by weakness in some international markets. Territories such as Brazil, Russia and Australia were all affected by a combination of the strong dollar hurting competitiveness and softer demand trends in some markets,” said Davy.
Glanbia’s wholly owned revenue was up 10.5% on a reported basis in the three months to April 4. On a constant currency basis, wholly owned revenue declined 3.6% when compared to the same period in 2014.
This was comprised of 3.9% volume growth, a 2.5% increase from acquisitions and a pricing decline of 10% as a result of lower market prices for US cheese and dairy ingredients.
Total Group revenue, including joint ventures and associates, was up 3.7% on a reported basis and declined 8.8% on a constant currency basis. This was comprised of 2.2% volume growth, 2.2% growth from acquisitions and a 13.2% pricing decline as a result of reduced dairy market prices.
Siobhán Talbot, Glanbia group managing director, said: “Glanbia delivered a solid performance in the first three months of 2015. On a reported basis performance benefited from the positive translation effect of a strong US dollar while on a constant currency basis the group delivered a satisfactory performance against a high comparator in 2014.
“We reiterate our full-year guidance of adjusted earnings per share growth of 9% to 11% on a constant currency basis with a reported result of over 20% if exchange rates remain at current levels for the rest of the year. We expect growth to be weighted to the second half of the year,” she said.
Glanbia’s Dairy Ireland business saw revenues grow 7.4%. It also reports that its outlook for the rest of the year remains positive, and projects that the business will continue to benefit from cost improvements.
Revenues at its Global Ingredients division fell 13.3% in the first quarter. The division’s volume growth of 10.7% was offset by a pricing decline of 24%. Glanbia said this decline was mainly due to lower US cheese market prices.
Nonetheless, Glanbia said that its ingredients division was expected to deliver an overall improved performance for 2015 compared to 2014 as its portfolio of products expands.
Glanbia’s net debt as at April 4 was €616m, up €106m from 2014 year end. The net debt increase was driven by seasonal increases in working capital requirements and the effect of a weaker euro foreign exchange rate on the translation of US dollar debt to euro for reporting purposes.
Glanbia’s share price fell around 1% yesterday afternoon to around €16.87 in London. Its 12-month price is up around 34%.
