Glanbia shares drop 9.4% as markets disappointed by trading update

Shares in Glanbia closed down 9.4 per cent in Dublin on Thursday at €9.99 after the company reported a disappointing performance from its performance nutrition unit.

The Kilkenny-based listed food group said its revenues rose almost 17 per cent in the nine months to October 5th and reiterated its full-year guidance as it expected its SlimFast acquisition to beef up results.

The nutrition group said the rise in revenue was driven by volume, which increased 2.4 per cent over the nine month period, a 3.2 per cent increase in pricing, and acquisitions, which added 11.3 per cent.

It reported a strong performance from its nutritional solutions unit, with revenue growing 25.4 per cent. The Watson acquisition added 12.2 per cent, with volume up 9.3 per cent and price up 3.9 per cent.

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Glanbia Performance Nutrition (GPN) saw revenue increase 16.5 per cent, with the SlimFast acquisition adding 25.8 per cent. However, that was partially offset by a decline of 1.4 per cent in prices, while volumes were down almost 8 per cent over the period. The third quarter saw a price increase implemented in the US.

Volumes were hit by challenging key non-US markets in Brazil, Middle East and India, with the group currently addressing these issues.

GPN has a portfolio of nine brands – Optimum Nutrition, BSN, Isopure, Nutramino, ABB, thinkThin, Amazing Grass, Body & Fit and SlimFast. Its products are sold in more than 100 countries.

Disappointing volumes

“In GPN, while we are very pleased with the performance of the SlimFast acquisition, our like-for-like volume performance is disappointing,” said Siobhán Talbot, group managing director. “This is largely driven by specific challenges in key non-US markets. We are actively addressing the issues in these markets as they represent a compelling long-term growth opportunity for the group.”

Glanbia said it expected adjusted earnings per share to be in the range of 88 cent to 92 cent for the full year.

In a note to clients, stockbroker Davy said Glanbia’s trading update “juxtaposes” strong delivery for its nutritionals and joint-venture activities, against a branded business (excluding SlimFast) that is “underperforming (near term) relative to stated ambitions and category fundamentals”.

Davy said investor attention and valuation remains firmly wedded to the latter, and expected to pencil in a “modest upward revision” to its full-year earnings forecasts for the Irish food company.