Shares in Glanbia jumped by close to 16 per cent on Wednesday after the nutritionals group raised its earnings forecast for the year while appointing a new chairman and announcing the sale of its underperforming Body & Fit unit.
The company, which has been struggling to contend with a spike in the cost of whey proteins, a key input, said revenue for the first six months of the year increased by 6 per cent to $1.9 billion.
Profits, however, were down by 7.5 per cent to $132 million reflecting the increased cost base.
However, the Dublin-listed group upgraded its full-year earnings guidance to 130-133 cent per share, up from 124-130 cent, as a result of what it described as “increased revenue momentum” in its performance nutrition division in the second quarter.
READ MORE
The upgrade saw the company’s shares rise by 15.8 per cent to €14.12 in Dublin.
The performance nutrition element of the business has been the star performer in recent years but it has been rocked by a jump in the cost of whey.
The company makes a suite of protein powders, including top-selling brand Optimum Nutrition, for gym goers and others. In February, it issued a profit warning linked to higher-than-expected whey prices, triggering a near 25 per cent collapse in the company’s shares.
As part of its latest half-earnings bulletin on Wednesday, Glanbia also unveiled Paul Duffy, a former chairman and chief executive of Pernod Ricard North America, as chairman designate to replace Donal Gaynor, who is due to step down from the role at the end of the year.
As part of moves to simplify the group’s complex corporate structure, the company separately announced the sale of its Dutch ecommerce platform Body&Fit for an undisclosed sum while noting there was “no news yet” on the planned sale of its underperforming dieting brand SlimFast.
Glanbia bought SlimFast in 2018 for $350 million (€309 million) but reported a non-cash impairment charge of $91 million last year relating to falling sales at the business unit.
There is speculation that the company is also seeking to offload its dairy division to concentrate on the sports nutrition and ingredients sides of the business.
“Today’s results reflect a first half of significant execution and progress as we generated 6 per cent revenue growth in the period, underpinned by strong growth in health & nutrition and dairy nutrition and a sequential improvement in performance nutrition through the period as the group navigated significant macroeconomic volatility,” chief executive Hugh McGuire said.
“We are today upgrading our full year adjusted EPS guidance to 130 to 133 cent as a result of increased revenue momentum in performance nutrition and improved margins in health and nutrition,” he said.
“The category trends remain positive, and we expect to see continued improvement in volumes across performance nutrition in the second half of the year with continued momentum in health and nutrition and dairy nutrition,” he said.
Goodbody analyst Patrick Higgins said: “The incremental stabilisation of demand behind the core performance nutrition portfolio and confidence in managing margins, despite still elevated whey costs, has clearly supported the earnings outlook and shares today”.
