Glanbia sees good first quarter for 2020
Glanbia, the global nutrition group, has issued an interim management statement for the three-month period ended 4 April 2020. This statement was issued in conjunction with the company’s annual general meeting, which was held as a closed meeting. Wholly owned revenues were up 17% versus the prior year due to good demand across both Glanbia Performance Nutrition and Glanbia Nutritionals. There has been limited operational disruption to date due to the exceptional performance of Glanbia employees and supply chain partners, the firm says, but due to the uncertainty of duration and impact of Covid-19, full-year financial guidance previously issued on 26 February 2020 is withdrawn.
Siobhán Talbot, group managing director (pictured) says, “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.
“As an essential service, the food industry has a critical role to play and we are very focused on continuing to serve our consumers, customers and communities through this global crisis.”
The period since Glanbia gave financial guidance in late February has been marked by a rapid acceleration of the Covid-19 pandemic across the globe. A significant proportion of the global population is now in lockdown, which has impacted consumer shopping activity in a variety of ways and it is difficult to model how those behaviours will evolve.
Glanbia Performance Nutrition delivered revenue growth of 3.6% in the first quarter of 2020 compared to the prior year. This was driven by volume growth of 4.1% offset by a price decline of 0.5%. Volume growth was driven by good growth in the North American Performance Nutrition and Lifestyle portfolios, while the price decline was driven by some increased promotional spend in International markets and the Direct-to-Consumer business.
The North America Performance Nutrition portfolio accounted for 39% of total Global GPN sales in 2019 and encompasses the Optimum Nutrition (ON), BSN and Isopure brands. This portfolio delivered a strong performance in Q1 2020 as a result of good demand in the online and food, drug, mass and club channels, which offset declines in speciality as well as contract business. Overall sales momentum slowed at the end of the quarter.
GPN’s strategy of developing in the online channel has helped to mitigate challenges in other channels related to the current consumer environment. The ON brand is the category leader in the online channel in North America and has developed and deployed digital content in the period, which helps consumers adapt their training and nutrition plans where they have to spend extended periods at home.
Glanbia Nutritionals delivered good revenue growth in the first quarter of 2020 versus prior year. Revenue increased by 24% versus the prior year. This was driven by a price increase of 14.2%, a volume increase of 7.5%, and the Watson acquisition, completed on 28 February 2019, delivering 2.3%.
US Cheese is a leading producer and marketer of American-style cheddar cheese in the US supplying brand owners and private label companies who in turn supply major retail and food service operators. It operates all of the dairy processing plants within GN and the Southwest Cheese JV plant, which produces cheese and whey ingredients.
All US Cheese operations and supply chains continue to operate to plan. US Cheese revenue increased by 28.6% in the period. This was driven by volume growth of 7.4% as increased demand from retail destinations compensated for lower demand from food service channels. Pricing increased by 21.2% as a result of stronger cheese pricing in the period versus prior year, a trend that has now reversed materially since the end of the quarter.
Glanbia share of joint ventures revenue grew by 10% in Q1 2020 versus prior year. This was driven by volume growth of 1.7% and price growth of 8.3%. Volume growth was primarily driven by Southwest Cheese, which more than offset a decline at Glanbia Ireland. Price growth was also primarily driven by Southwest Cheese, which was offset by a decline in Glanbia Cheese UK.
All of Glanbia’s JVs have performed well in Q1 2020. Construction of the group’s new joint venture project in Michigan, US continues as planned. Construction of the new joint venture project in Portlaoise, Ireland has paused due to Covid-19 restrictions in place currently in Ireland, which may delay the completion of this project.
A process to identify a successor as chairperson of the plc commenced earlier this year. A sub-committee of the board, led by Dan O’Connor, senior independent director, was established. External advisors were appointed to assist the sub-committee in the selection process, which is progressing well.
For more information, visit: www.glanbia.com/agm.
