Glanbia plc and co-op appoint advisers on end to milk quotas

LISTED COMPANY Glanbia and its 54 per cent shareholder Glanbia Co-op have appointed separate advisers to evaluate options on increasing milk processing capabilities in the run-up to the abolition of milk quotas in 2015.

Glanbia managing director John Moloney said the end of the milk quota regime provided a unique opportunity to “review the existing co-operative/plc model, which was developed after the introduction of EU milk quotas in 1984”.

Mr Moloney said the company was discussing a range of options as the company planned for expansion post-2015. Glanbia Co-op chairman Liam Herlihy said the co-op and the plc shared a “common vision” and were focused on maximising growth opportunities.

A proposal to demerge the co-op and plc was narrowly defeated by co-op shareholders in 2010.

Glanbia, which intends to invest in a major processing plant in the run-up to 2015, said it would provide an update on the processing investment in the second quarter.

The company yesterday posted 2011 results which were ahead of expectations, although the company was cautious on its outlook for the current year.

Revenues at the Kilkenny-headquartered company, including joint ventures, increased by almost 27 per cent to €3.3 billion on a constant currency basis, boosted by a strong performance from the company’s nutritionals and US cheese business. Ebita (earnings before interest, taxation and amortisation) was up 22.5 per cent at €212 million.

Glanbia’s US cheese and global nutritionals division continued to be the main driver of growth for the company, with revenue up 35 per cent to €1.38 billion. The division represents 42 per cent of the group’s overall revenue and 61 per cent of ebita.

Glanbia’s global nutritionals business achieved 54 per cent revenue growth, with nutritional bars up 15 per cent, healthy ageing nutrition products up 13 per cent, and revenues from nutritional beverages 18 per cent higher.

Mr Moloney said Glanbia’s nutritionals business was benefiting from underlying trends. “While traditionally consumers were mainly in the sports sector, 55 per cent of our customers are now using products as a lifestyle, mainstream option.”

As well as consumer products such as sports drinks and energy bars, Glanbia also has an ingredients business, which develops protein ingredients for products such as bars, cereals and yogurts.

Its US cheese business benefited from strong prices for most of 2011, as well as increased exports to regions such as Mexico and the Middle East.

Glanbia said yesterday it expected to invest between €150 and €200 million in acquisitions in the nutritionals space in 2012.

Its Dairy Ireland division, which accounts for 41 per cent of total revenue, enjoyed a 19 per cent jump in revenue last year, reflecting strong dairy markets. Glanbia’s consumer products division, which includes products such as Kilmeaden cheese and Avonmore milk, continued to be affected by a tough trading environment and weak consumer sentiment.

The company’s joint ventures and associates division, which accounts for 17 per cent of revenue, posted a 30 per cent sales increase, in part due to a 40 per cent increase in capacity at Southwest Cheese, its cheese plant in New Mexico in the US.

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