Food group Glanbia plc said today in an Interim Management Statement for the period 3 January to 10 May 2010, that it is performing well year to date and is expected to deliver a strong first half.

Glanbia's operating environment has improved considerably, when compared to a very difficult first half in 2009, it said. The group also continues to focus on strong cost management and implementation of an ongoing rationalisation programme to achieve sustainable cost competitiveness, particularly in the Irish businesses. In the first half, global dairy markets have substantially recovered from the severe downturn experienced in the prior year. The performance of the Irish Dairy Ingredients will be significantly improved compared to a major loss incurred in the first half of 2009. While the trading environment remains difficult in Ireland, Consumer Products and Agribusiness are performing satisfactorily.

The firm said US Cheese & Global Nutritionals are expected to deliver a good performance in the first half. US cheese markets are higher compared to 2009 and demand is robust. Global nutritionals has had a strong start to the year across all the business segments. International joint ventures and associates are also performing well and the commissioning of the US$85 million 40% expansion of Southwest Cheese is on time and on budget.

Glanbia is revising its 2010 earnings per share guidance as a result of the forecast strong first half performance and the prospects for the full year. The key drivers of a better outlook are:

• A continued recovery in Irish Dairy Ingredients,

• A good performance by US Cheese & Global Nutritionals, underpinned by  continued good organic volume growth in Global Nutritionals;

•  All other aspects of the business performing broadly in line with expectations; and

• Focused cost management and an excellent operating performance.

As a result Glanbia now expects mid-teen earnings growth for the full year.

At a meeting last night of the Glanbia Co-operative Society, which has a 54% stake in the Plc, members rejected a €340m deal to separate the Irish dairy business from the group.

Under the rules of the co-op, the motion required 75% of those attending to vote. The support of 73% meant the deal fell. In all 4,067 of the more than 8,000 eligible voters cast a ballot.

John Moloney, Group Managing Director of Glanbia plc, said: "We believed this was a compelling and strategic opportunity for both the Society and the plc.  A lot of work has gone into bringing this proposal to the vote.  We did not undertake this process lightly and of course, it is a big disappointment that it did not receive the necessary endorsement from the members of the Society to take the deal forward. While it is important for us now to take some time to reflect on this outcome, we remain very confident of the underlying strength of the group's businesses."

Goodbody's Liam Igoe commented: "The decision by the Glanbia co-op members to reject the restructuring plan for the plc (vote was 2% short of the required 75%) means that we will be reversing our forecast downgrade of April 21st, which was based on the assumption that the (dilutive) disposal of Dairy Ireland would proceed. Furthermore, in view of the strong international markets for dairy products and the positive IMS today, we are further upgrading these numbers. Consequently, we are now forecasting EPS in FY10 of 36.2c vs. our previously downgraded EPS of 27.6c and prior forecast (before the restructuring announcement) of 33.5c. Our SOTP value suggests a valuation of 328c /s share. Allowing for underlying earnings growth of c.10% (i.e. stripping out the volatile Ireland Division’s impact), would suggest a fair value 12 months hence of 360c, which, compares with our previous share price target of 380c."