Nutrition business drives Glanbia’s 20% revenue rise in first quarter

Glanbia’s revenue rose by more than 20 per cent in the first quarter as a result of strong demand across its nutrition and performance nutrition businesses.

But the food group withdrew financial guidance for this year as a result of the Covid-19 pandemic.

In advance of Wednesday’s agm, the Kilkenny-headquartered company said revenues for the three months to April 4th rose 20.2 per cent on a reported basis and 17 per cent on a constant currency basis due to the stronger dollar to euro exchange rate.

Drivers for the revenue rise were price growth of 9.2 per cent and volume growth of 6.3 per cent.

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On Covid-19, the company said it had seen “limited operational disruption” on its business to date due to the “exceptional performance” of its employees and supply chain partners.

Strong demand in North America had offset weaker demand in international markets, it said, where the pandemic had had a greater impact.

As of April 4th, Glanbia’s net debt was just over €690 million, a fall of almost €120 million on the same period last year. The company also had total committed banking facilities of €1.15 billion, none of which are due for renewal in the coming 12 months.

To preserve cash, Glanbia has also curtailed discretionary spending and is monitoring its working capital.

While the food group withdrew its previously issued financial guidance, the company said it remained focused on delivering strategic initiatives announced in February. The exit from contract manufacturing in North America remained on track, the company said.

‘Pantry loading’

Glanbia said that, although it traded well in the first quarter, demand became more volatile at the end of the quarter and into April, particularly in its performance nutrition business.

“Overall demand in our key end markets was positive in the first quarter. However, greater volatility in consumer shopping behaviour was evident in recent weeks arising from Covid-19 and due to uncertainty of duration and impact of this pandemic, full-year 2020 financial guidance is withdrawn,” said managing director Siobhán Talbot.

Glanbia noted that “pantry loading” was evident in the first half of March across its Slimfast and Think! brands while sales decelerated in the last two weeks of the month.

The company’s nutritionals business saw revenue rise 24 per cent in the quarter compared to the previous year. Volume growth was behind the rise while prices declined marginally.

Revenue in the company’s US cheese business rose 28.6 per cent in the period, helped by volume growth and price increases of more than 21 per cent.

"We believe the fundamentals of the business are robust and expect it to exit the current dislocation in good health," Davy analysts Cathal Kenny and Roland French wrote in a note to clients.