27 August 2008 - Glanbia plc, the international cheese and nutritional ingredients Group, announces its results for the half year ended 28 June 2008. The content and structure of this announcement reflects the new requirements for half yearly results, under the EU Transparency Directive.
2008 Half Yearly Results Summary
* Good half year performance, with increased revenue, profits, margins and earnings per share;
* Revenue up 6.3%, like-for-like revenue up 20%;
* Profit before tax pre exceptional up 37.6%, like-for-like profit before tax pre exceptional up 49%;
* 10% increase in dividend per share;
* Food Ingredients USA and Nutritionals delivered strong results;
* Significantly improved performance from the Group's international joint ventures; and
* All other divisions performed broadly in line with expectations.
HY 2008 HY 2007 Change
Revenue(1) EUR1,106.2 m EUR1,040.3 m Up 6.3%
Operating profit pre exceptional EUR56.5 m EUR48.5 m Up 16.5%
Operating margin pre exceptional 5.1% 4.7% Up 40 bps
Net financing costs (EUR9.1 m) (EUR8.6 m) Up EUR0.5 m
Share of results of joint ventures EUR5.6 m (EUR1.3 m) Up EUR6.9 m
and associates(1)
Profit before tax pre exceptional EUR53.1 m EUR38.6 m Up 37.6%
Profit after tax pre exceptional EUR44.1 m EUR33.8 m Up 30.5%
Exceptional items(2) (EUR2.3 m) - See note
Basic earnings per share 13.98 c 11.47 c Up 21.9%
Adjusted earnings per share(3) 15.74 c 12.45 c Up 26.4%
Dividend per share in respect of the 2.75 c 2.50 c Up 10.0%
half year
Net debt EUR296.3 m EUR269.1 m Up EUR27.2 m
1) Revenue including Glanbia's share of the revenue of joint ventures and associates was EUR1.3 billion in the first half of 2008, up 6.5% on the same period last year. Share of results of joint ventures and associates is an after interest and tax amount.
(2) In March 2008, Glanbia announced the sale of its Pigmeat business in a Management Buyout and the net exceptional of EUR2.3 million is additional costs of EUR2.6 million associated with this disposal and a related tax credit of EUR0.3 million.
(3) Before exceptional items and amortisation of intangible assets.
John Moloney, Group Managing Director, said:
'Glanbia had a good first half delivering strong growth relative to the first half of 2007 and a 26% increase in adjusted earnings per share. The second half of this year is expected to be somewhat ahead of the second half of 2007. Margins have recovered in Consumer Foods Ireland and there is a satisfactory outlook for Agribusiness & Property. While organic growth remains strong in Food Ingredients USA and Nutritionals, the performance of Food Ingredients Ireland in the second half will be reduced relative to the second half of 2007, as global dairy market volatility has created a time lag in balancing input costs and market returns. International joint ventures are expected to sustain their improved first half
performance. For the full year, we are confident of a good overall performance and we believe the Group will deliver double digit earnings growth, in line with market expectations.
We are delighted with the acquisition of Optimum Nutrition which we announced on 25 August 2008. Optimum has leading US sports nutrition brands and an excellent reputation in the sector. It represents a key strategic development in the growth of our Nutritionals business and is expected to be earnings enhancing from this year.'
Interim management report for the half year ended 28 June 2008
Operations review
Glanbia is organised on a geographic basis by division. For the half year 2008, 34% of Group revenue(1) and 32% of Group operating profit(1) was generated in Ireland, with 66% of Group revenue(1) and 68% of Group operating profit(1)
generated from international businesses.
The Group operates in the Irish market through Consumer Foods Ireland and Agribusiness & Property. Consumer Foods Ireland incorporates nutritional beverages, fresh dairy products and cheese, soups and spreads for the Irish
retail market. Agribusiness is engaged primarily in feed milling, grain processing and retailing. Property is tasked with maximising the value of the Group's property portfolio.
International markets are served by the Food Ingredients and Nutritionals division and international joint ventures. Food Ingredients produces cheese, butter, casein and protein ingredients for international customers at processing
facilities in Ireland and the USA. The Group's global nutritionals business produces a wide range of speciality whey proteins, customised premix solutions and other nutritional ingredients for use by food and beverage companies. The principal Group joint ventures include cheese manufacturers in the USA and the UK and a consumer products joint
venture in Nigeria.
(1) Share of Group including joint ventures and associates
IRELAND
Consumer Foods Ireland* and EUR'000 HY 2008 HY 2007 Change
Agribusiness & Property
Revenue 417,722 418,369 Similar
Operating profit pre 21,923 20,141 Up 9%
exceptional
Operating margin pre 5.2% 4.8% Up 40 bps
exceptional
* In March 2008, Glanbia announced the sale of its Irish Pigmeat operations to a
Management Buyout team.
Revenue, including the Pigmeat business unit, was broadly similar at EUR417.7 million (HY 2007: EUR418.4 million). Operating profit pre exceptional increased by 9% to EUR21.9 million (HY 2007: EUR20.1 million). Operating margin pre
exceptional grew by 40 basis points to 5.2% (HY 2007: 4.8%). These results reflect an improved performance from Consumer Foods Ireland and a satisfactory performance from Agribusiness & Property.
Consumer Foods Ireland
Consumer Foods Ireland had a solid first half with margins recovering as anticipated in challenging market conditions. A key factor was the recovery in the market place of the increased milk input costs experienced in 2007.
Outlook
The Irish food retailing sector is very competitive with changing trends in consumer demand driven partly by the current downturn in the economy. As a result, the strategy for Consumer Foods Ireland is threefold: reinvestment in
the business to sustain a strong brand portfolio and relative market positions, an ongoing focus on cost efficiency and an emphasis on product and packaging innovation. We expect this business to sustain its improved performance for the second half, delivering an overall satisfactory performance for the year.
Agribusiness & Property
Revenue in this division was up compared to the half year 2007. Operating profit was broadly similar and operating margin, excluding Property, was relatively stable.
Agribusiness
The first half of 2008 has seen unprecedented rises in raw material prices for feed and fertilizer inputs, relatively stable feed volumes and somewhat weaker fertilizer volumes. Against this market environment, Agribusiness maintained its
market position with competitive pricing and together with continued progress in the marketplace with the CountyLife format, overall results for Agribusiness were satisfactory in the first half.
Outlook
Going forward, the outlook for Agribusiness remains positive.
Property
The performance of the Property business unit was marginally down compared to the first half of 2007. Outlook for 2008 is for a similar performance to 2007, subject to the timing ofindividual projects.