“Second-half 2016 profit growth will be further supported by a return to growth at their Glanbia nutritional division and further product launches”, the broker said, although it cautioned that a weaker dollar could create a negative reporting currency headwind for the company.
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Glanbia has reported a strong set of results for its fiscal first half, helped by growth at its performance nutrition division.
The company, primarily based in Ireland, attributed the increase to its performance nutrition business, where pre-tax earnings amounted to 81.7 million euros, a 35 percent increase on prior half year on a constant currency basis.
However, Ms Talbot said global dairy markets “remain weak and continue to be a challenge for parts of the business”. It said the performance nutrition business had remained the engine of growth with the prospect of a rebound in the ingredients business to come, supported by a healthy balance sheet.
Glanbia Cheese, which is a joint venture between Glanbia and U.S. firm Leprino Foods, processes about 20% of all milk produced in Wales.
“Sales of performance nutrition brands and value-added nutritional ingredients showed good growth in the first half of 2016, delivering on our vision to be a leading nutrition business”, managing director Siobhán Talbot said.
Glanbia’s total investment in capital expenditure was €41.7 million in the first half of 2016, of which €27.8 million was strategic investment reflecting the on-going focus on the organic growth potential of the business.
The Board is recommending an interim dividend of 5.37 cent per share (HY 2015: interim dividend 4.88 cent per share). This represents an increase of 10% on the prior year interim dividend. Irish withholding tax will be deducted at the standard rate where appropriate.
US Cheese volumes were broadly in line in the first half of 2016 as plants operated close to full capacity.
The dairy market downturn, which pushed cheese prices down by 8 per cent during the period, saw revenue decline 1.7 per cent to €1.84 billion on the corresponding period previous year. Wholly owned EBITA margin was 11.0%, up 130 bps, constant currency and reported.
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Glanbia Nutritionals expects to deliver modest EBITA improvement versus prior year. Low GI foods provide sustained energy release, promoting a feeling of satiety and delivering health benefits including weight management and reduced risk of diabetes and heart disease.
