Food group Glanbia today reported that a 58% increase in pre-tax profits for the first half of this year (H1 2010) and it also raised its full-year forecasts for the full year.

Glanbia reported a pre-tax profit of €60.2m  as sales revenue grew by almost 10% to just over €1bn.John Moloney, Group Managing Director, said: "Glanbia delivered an excellent first half performance driven mainly by a return to profitability in Irish Dairy Ingredients and a good performance by Global Nutritionals. Operating margin grew 130 basis points to 6.4% and adjusted earnings per share increased just over 50% to 18.62 cents per share.  

 For the full year 2010, US Cheese & Global Nutritionals is expected to deliver reasonable year-on-year growth, underpinned in particular by the performance of Global Nutritionals. In Dairy Ireland, performance will be somewhat mixed with Irish Dairy Ingredients strongly ahead compared with a loss in 2009, Consumer Products behind in the context of a very tough trading environment and Agribusiness marginally ahead of a difficult 2009. International Joint Ventures & Associates are expected to have a good full year, underpinned by a solid performance from Southwest Cheese in the USA and Glanbia Cheese in the UK, and an improved operating performance at Nutricima in Nigeria.

 While the global economic environment remains uncertain, the Board, taking current trading conditions into account is confident Glanbia will achieve strong revenue, operating profit and margin growth for the full year. As a result the Group has revised adjusted earnings per share guidance upwards and is now expecting approximately 20% adjusted earnings per share growth for the full year."

Results detail

Goodbody's Liam Igoe commented: "Glanbia’s interims results were consistent with its IMS update on July 14th. The most notable feature was the recovery in its Irish bulk dairy activities (part of Dairy Ireland), where the rebound in international dairy commodity prices has led to a return to profitability. The results were broadly as we had expected. With international dairy prices having rebounded strongly from their lows of last year, there was no surprise in seeing the Irish bulk dairy activities move from an estimated loss of over €10m at H1 last year into profitability in H110.

In tandem with this, the Irish based Consumer Foods operation (the other part of the Dairy Ireland division) saw profits fall, in part due to the high cost of its main raw material - milk, though also reflecting the difficult retail environment in Ireland at the moment. Glanbia’s cheese and nutritionals businesses saw overall profits increase on last year (by c6%). Cheese has seen a rise in prices but volumes declined due to plant downtime (for maintenance) and profits were slightly lower. Nutritionals continues to enjoy strong organic growth, with volumes up in excess of 10%. The cheese JV in New Mexico has had the planned 40% capacity expansion completed and is now fully operational.

This will be positive for its H2 and also for Glanbia’s Idaho based nutritionals business. Margins were lower reflecting Glanbia’s decision to invest in increased marketing, particularly at Optimum Nutrition. Group debt was higher than forecast at €539m and is anticipated to be c€400m at year end (versus our forecast of €415m) and Glanbia’s forecast debt/ebitda of 2.3x does give it some leeway to make further modest acquisitions in the nutritionals area. There is no update on the potential sale of its Irish dairy business. At first glance, we are likely to nudge our forecasts up slightly, though our current forecast EPS growth of 18% is only modestly shy of the new 20% growth guidance."