Glanbia sees sharp decline in earnings due to Covid-19 crisis

Ebita down 25.4% as company announces deal to acquire Foodarom for €38.4m

Glanbia withdrew its 2020 full year financial guidance earlier this year due to the uncertainty of duration and impact of the Covid-19 pandemic

Glanbia withdrew its 2020 full year financial guidance earlier this year due to the uncertainty of duration and impact of the Covid-19 pandemic

 

Glanbia’s performance nutrition business has been hit hard by the Covid-19 pandemic, with half-year adjusted earnings from the division down more than 58 per cent.

The Kilkenny-based food group is a global leader in the performance nutrition market, supplying protein products to gym-goers and dieters through its Optimum Nutrition and Slimfast brands.

Lockdowns in several countries, which caused the closure of gyms and specialised health stores, has triggered a major slowdown in sales, however.

The company’s latest results indicate revenue from its performance nutrition business was down 15.6 per cent to €532 million for the six months to July 4th, while adjusted earnings within the division fell 58.2 per cent to €19.6 million.

Glanbia managing director Siobhán Talbot insisted, however, that sales had already bounced back, while noting that the Covid-19 crisis had further accelerated the shift to more healthier lifestyles, which the company was well positioned to capitalise on.

“Covid-19 has accelerated some of the trends that Glanbia was already aligned to; the health and wellness trend, the link between diet, nutrition and health, the link between obesity and illness,” she said.

“We have great brands and ingredients that play into that.”

Ms Talbot also said the company had developed a stronger online portal to better accomodate the growing preference for buying protein powders online.

Overall Glanbia reported a 25 per cent decline in adjusted earnings to €85 million. Revenues rose 2.3 per cent to €1.8 billion from €1.76 billion a year earlier, while adjusted earnings per share fell 17.2 per cent to 31.05 cents.

Total profit for the group was €69.9 million, down €16.9 million on the prior year.

As part of the results, Glanbia signalled its intention to buy Canadian specialist flavours business Foodarom for 60 million Canadian dollars (€38.4 million) .

The transaction is expected to complete in the second half, subject to customary closing conditions, and is expected to be earnings accretive from 2021.

The acquisition will complement its nutritionals business, which reported a 12 per cent rise in revenue to €1.3 billion and a near 7 per cent decline in adjusted earnings to €48.1 million.

Glanbia’s board is recommending an interim dividend of 10.68 cent per share, to be paid in October, unchanged versus the same six months in 2019.

The company withdrew its 2020 full year financial guidance earlier this year due to uncertainty over the duration and impact of the Covid-19 pandemic.

“Our compelling belief is that consumers’ increasing focus on health and wellbeing, as well as greater importance on trust and quality, positions Glanbia well for the future, given our core purpose of the delivery of better nutrition via our brands and ingredient solutions,” said Ms Talbot.

“While the short term outlook remains uncertain, the board is confident that Glanbia has the portfolio, the consumer insight and the operational expertise to succeed in this new environment,” she said.