Facing a tough home market the company looks to foreign fields

Analysis: Glanbia said its 2005 performance was "satisfactory", given the challenges the food group faces in the home market that still dominates its performance. The market appeared less impressed and shares in the food group gave up 9 cent to close at €2.66.

With profits on the way down last year, the group is counting on the success of its international joint ventures to meet next year's target of 10-12 per cent growth in earnings per share.

To get there, Glanbia needs to increase its adjusted earnings per share by 6 per cent this year to 22.1 cent.

The spike in energy prices is not the only threat on the domestic horizon. Just as reform of the EU's agriculture egime started to eat into profits in the second half of 2005, farmers in Northern Ireland took unused EU quotas in England to increase their exports into the Republic by almost 50 per cent.

The rise of own-brand milk is another problem for big Glanbia brands such as Avonmore and Premier.

While the upward creep in Irish business costs generally will always pose dangers to big manufacturers such as Glanbia, the group spent the best part of €16 million last year to reorganise key Irish operations such as its distribution units in Dublin and Cork and a Yoplait plant in Inch, Co Wexford.

Its hope must be that such expenditure will put a floor on the 50 basis point drop to 4.4 per cent in its pre-exceptional operating profit.

At the same time, a sustained bout of bird flu in Europe would present opportunities for the pigmeat division if consumers shirked poultry.

For all that, Glanbia's big bet is on its international operations.

Already the owner of a controlling stake in Europe's biggest pizza cheese company, Glanbia has high hopes for its Southwest Cheese 50:50 joint venture in New Mexico, whose $190 million (€159.52 million) plant will reach full production next year.

That will make Glanbia the biggest producer of American cheddar.

The group also has a 50 per cent share of a new plant in Nigeria, whose powdered and evaporated milk products were introduced to the market last year.

Stating that such products were well-received, managing director John Moloney said the group was already planning a second factory in Nigeria and possibly a third.

After realising an exceptional profit of €10.96 million on the sale of IAWS shares, the group also aims to cash in on the property boom by selling off some of its landbank. Glanbia's income stream here will be modest. As an agricultural group, it does not have the sort of city-based assets that fetch record prices.