Glanbia’s sports nutrition business shields company from dairy slump

Glanbia’s sports nutrition business, which includes a range of products derived from the once-discarded whey protein, has become the largest contributor to group’s earnings.

According to the food company’s latest half-year results, performance nutrition accounted for 38 per cent of total earnings, eclipsing its ingredients division for the first time.

On the back of best-selling brands such as Optimal Nutrition and BSN, the company is now ranked as the biggest global player in the market.

The latest figures show earnings from its nutrition businesses increased 17.4 per cent to €60.7 million for the period while revenues were up 1.9 per cent.

The Kilkenny-headquartered firm reported overall revenue of €1.9 billion for the six months, a performance described by managing director Siobhan Talbot as "resilient" in the face of crashing dairy prices.

Revenue was up 4.4 per cent on a reported basis due to the recent strength of the dollar but down 8.4 per cent on a constant currency basis as a result falling dairy margins.

Its global ingredients business delivered “a satisfactory performance” in the context of challenging markets, the company said. Revenues decreased by 11.7 per cent to €609.3 million as volume growth of 6.8 per cent was offset by an 18.5 per cent decrease in prices.

The group’s dairy Ireland division also performed well, with earnings (Ebita) of €17.5 million, as margins recovered to 4.7 per cent and revenues rose by 4.7 per cent to €368.9 million. The group incurred rationalisation costs of €1.1 million, largely due to the ongoing redundancy programme in its dairy Ireland division.

Ms Talbot told The Irish Times it was difficult to predict the timing of a recovery in global dairy markets, but that the downward trend in prices was likely to continue for at least the remainder of the year.

Ms Talbot insisted the Glanbia co-op had supported farmers through the current crisis, shielding them from the full extent of price drops. She also noted the co-op was spinning out 10 million shares in the coming weeks, which would see about €180 million of value disbursed to members.

Glanbia reiterated its full guidance of adjusted earnings per share growth of between 9 and 11 per cent, on a constant currency basis. But, given the strength of the US dollar, this is likely to translate to reported earnings growth of 25 per cent for the full year.

Global performance nutrition is expected to be the main driver of 2015 growth “as momentum returns to the US business albeit this is somewhat offset by currency and geopolitical related challenges in certain non US markets”, but dairy Ireland is also forecast to deliver some recovery in margins.

“Today’s results demonstrate that our strategy is on track. As a global nutrition company, whose purpose is ‘delivering better nutrition for every step of life’s journey’, we are focused on the development of a branded and ingredient product portfolio to serve the growing consumer demand for nutritional products in formats suitable for healthy and active lifestyles,” she said.