Glanbia sees earnings growing up to 10% in next three years

Glanbia said on Wednesday it expects to post average annual earnings per share (EPS) growth of 5 to 10 per cent over the next three years, even as the nutrition group’s SlimFast brand is grappling with flagging sales.

Davy analysts, including Cathal Kenny, said in a note to clients that the midpoint of the forecast points to 24 per cent cumulative EPS growth over the period. Over the past decade, the company has delivered a 6.5 per cent compound annual EPS growth, they noted.

The Kilkenny-based group, led by managing director Siobhán Talbot, sees annual revenue growth of 5 to 7 per cent in its key Glanbia Performance Nutrition (GPN) unit, which sells protein powders and shakes to gym-goers and dieters, between 2023 and 2025. That forecast excludes the effect of any currency movements over the period.

It sees the GPN unit’s earnings before interest, tax and amortisation (ebita) margin coming in at over 12 per cent over the three years.

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While Glanbia reported last week that revenues in its GPN division grew by 13.2 per cent on a like-for-like basis on the year in the third quarter, its SlimFast brand, which GNP acquired for $350 million (€349.2 million) in 2018, saw consumption of its products slump 18.2 per cent in the 12 weeks to the beginning of October.

Glanbia cited general weakness in the international diet category for the drop. It is seeking to refresh the SlimFast brand in advance of the key early 2023 diet season, “supported by new brand and pack design, creative content and innovation”.

Meanwhile, Glanbia Nutritional Solutions, a supplier of dairy and plant-based proteins to food companies, is forecast by the group to deliver an average of 3-5 per cent sales volume growth over the next three years, with the ebita margin for this unit also projected to top 12 per cent.

“Overall, this is an encouraging three-year guidance update which indicates an expectation for resilient trading, notwithstanding the near-term challenges surrounding the SlimFast brand,” said Patrick Higgins, an analyst with Goodbody Stockbrokers. “The guidance looks marginally better across the two divisions, particularly on margins, with EPS expectations broadly in line.”

Shares in Glanbia were up 2.1 per cent at €10.98 in mid-afternoon trading in Dublin.