Mixed results for Glanbia

Glanbia, the international cheese and nutritional ingredients group, is on target to achieve adjusted earnings per share of €0.30 to €0.31.

The company has issued a full year pre-close trading statement. The group expects to announce 2009 full year results in early March 2010 for the year ended 2 January, 2010.

The statement said that the impact of the downturn in global dairy markets in the first half of the year, lower US cheese prices and a poor economic backdrop with weak consumer demand resulted in a difficult year in 2009.

Strong cost management together with an impressive operational performance could not fully offset an unprecedented trading environment.

The group expects to report adjusted earnings per share of 30 to 31 cents for 2009, in line with revised adjusted earnings per share guidance for the full year, which was announced on 30 April 2009.

US Cheese & Global Nutritionals is expected to deliver a good result that is ahead of 2008. A good performance in Global Nutritionals driven by solid organic growth, new product introductions and the full year effect of the acquisition of Optimum Nutrition in August 2008 more than offset the effect of lower US cheese prices.

As previously announced the result from Dairy Ireland will be considerably lower than 2008. For most of the year the decline in global dairy markets created a difficult environment for the Irish dairy ingredients business. Prices and returns for dairy processors and suppliers were below the cost of production, which gave rise to a major first time loss in Irish Dairy Ingredients for the full year.

As part of ongoing improvements focused on achieving sustainable cost competitiveness Glanbia is implementing a further cost reduction programme in 2010 in Dairy Ireland. A net provision of approximately €15 million, mainly relating to redundancies, will be provided for in 2009.

A review of the company’s pension arrangements was also completed last year. The revisions to the overall group pension arrangements, which are currently being finalised, give rise to a net reduction in pension liabilities which will result in a 2009 exceptional credit of approximately €50m.

In total, Glanbia is expecting a post tax net exceptional credit of around €17m for the year.

Looking forward, Glanbia’s board and management believe markets remain volatile and consumer sentiment is fragile. They remain cautious but based on current economic and dairy market forecasts expect a return to earnings growth in 2010 in the order of 6% to 8%.