Glanbia's revenue jumps 28% in first 10 months of year

FOOD GROUP Glanbia continued its strong first-half performance in the third quarter of the year, with revenues rising by 28 per cent in the first 10 months of the year compared to the same period last year.

Glanbia’s share price closed 1 per cent higher, having risen by 3 per cent in early morning trade, after the company said it expects full-year earnings per share (eps) growth to be at the upper end of the 18-20 per cent range it announced at its half-year results in August.

The company now expects eps growth of 20 per cent on a constant currency basis.

Glanbia’s 28 per cent revenue increase reflected a 10 per cent increase in underlying volume growth; 13 per cent was due to higher pricing and an enhanced product mix, while 5 per cent was attributed to acquisitions; mainly from US nutritional supplement maker BSN which was purchased in January.

The company’s US Cheese Global Nutritionals business, which accounts for about half of the company’s turnover, grew by 35 per cent over the quarter. Higher milk costs at the US cheese business were offset by higher cheese prices, and the company expects the division’s performance to be in line with 2010.

The nutritionals division experienced strong underlying volume growth, reflecting strong demand for its products. However, a significant increase in whey costs, a key ingredient, put some pressure on margins. This was counterbalanced by the effect of higher whey prices on Glanbia’s whey-producing businesses.

Glanbia managing director John Moloney also noted that higher whey prices were a positive indicator of increasing demand for the product.

Speaking to The Irish Times,he noted that product innovation was a strong component behind the growth in the company's nutritionals business. "Twenty per cent of the current year's revenue is driven by product development in the previous three years. As a result, reinventing the product portfolio is important" he said.

Glanbia’s Dairy Ireland business, which comprises a consumer foods division, a dairy ingredients division which processes Irish milk into cheese and dairy-based ingredients, and a smaller agri-business division, experienced a 23 per cent rise in revenue.

However, the company noted that full year profit will be weighted towards the first half of the year, due to exceptionally high milk production in that period. This means that Irish farmers will be obliged to limit their milk production in the second half due to EU quotas.

Glanbia’s consumer foods division remained under pressure in the third quarter, with the company forecasting a year on year decline in 2011. Its agribusiness performed in line with expectations.