Glanbia expect growth improvement for 2010
Glanbia has confirmed that it is on target to achieve adjusted earnings per share of 30 to 31 cents with a return to earnings growth expected in the New Year.
The international cheese and nutritional ingredients group has predicted a return to earnings growth in 2010 of six to eight per cent.
In its full year pre-close trading statement issued this week the group said that it expects to announce 2009 full year results in early March 2010 for the year ended 2 January, 2010.
The statement also said that the impact of the downturn in global dairy markets in the first half of 2009 saw lower US cheese prices and a poor economic backdrop with weak consumer demand and this resulted in a difficult year; and that strong cost management together with an excellent operational performance could not fully offset an unprecedented trading environment.
However, US Cheese & Global Nutritionals is expected to deliver a good result that is ahead of 2008. A good performance in Global Nutritionals driven by solid organic growth, new product introductions and the full year effect of the acquisition of Optimum Nutrition in August 2008 more than offset the effect of lower US cheese prices.
As previously announced the result from Dairy Ireland will be considerably lower than 2008. For most of the year the decline in global dairy markets created a very difficult environment for the Irish dairy ingredients business.
Prices and returns for dairy processors and suppliers were below the cost of production, which gave rise to a major first time loss in Irish dairy ingredients for the full year. A reduction in farm incomes affected farm purchasing power, leading to a performance in Agribusiness that will be lower than 2008. Consumer Products is expected to report a reasonable result for 2009 underpinned by a significant internal cost reduction programme. In the latter part of 2009, in response to a very competitive Irish food retail market, Consumer Products reduced prices to customers on a range of product lines.
As part of ongoing improvements Glanbia is implementing a further significant cost reduction programme in 2010 in Dairy Ireland. A net provision of approximately €15 million, mainly relating to redundancies, will be provided for in 2009.
A strategic review of the group’s pension arrangements was completed in 2009. The revisions to the overall group pension arrangements, which are currently being finalised, give rise to a net reduction in pension liabilities which will result in a 2009 exceptional credit of approximately €50 million.
In total, Glanbia is expecting a post tax net exceptional credit of approximately €17 million for the year.
Trading conditions improved somewhat in the later stages of 2009 with an uplift in global dairy and US cheese markets. However, markets remain volatile and consumer sentiment is fragile. Glanbia Board and Management remain cautious at this early stage of the year but, based on current economic and dairy market forecasts expect a return to earnings growth in 2010 in the order of six to eight per cent.
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