Glanbia has reported a strong pick-up in revenue for the first quarter on the back of a recovery in global dairy prices and a bigger contribution to earnings from its acquisitions.
The Kilkenny-based food group also announced the successful conclusion of negotiations to sell off a controlling stake in its dairy business to Glanbia Co-op, its largest shareholder.
The deal, which is still subject to shareholder approval, will see Glanbia Co-op pay €112 million to Glanbia plc for a 60 per cent shareholding in its Dairy Ireland division.
The move will see Glanbia’s Dairy Ireland consumer foods and agribusiness units hived off into a separate company called Glanbia Ireland.
The co-op also confirmed plans to “spin out” a further 5.9 million shares in Glanbia plc to members and add €40 million to its members’ support fund.
The value of the share “spin-out” is an estimated €100 million based on the Glanbia closing share price of €17.13 on Friday, February 17th, which would be worth approximately €6,637 to ordinary members, and up to €10,791 for active dairy farmer members.
Co-op’s stake
The combined effects of the changes will reduce the co-op’s stake in Glanbia by five percentage points to 31.5 per cent. Glanbia said the Dairy Ireland transaction is expected to dilute adjusted earnings per share by 5-7 per cent on a full-year basis.
In three months to April 1st, the company said total group revenue increased by 9.6 per cent on a reported basis and was up 7.7 per cent on a constant currency basis compared with the same period last year.
Glanbia said the stronger performance was driven by pricing growth of 2.1 per cent linked to improved dairy markets, volume growth of 1.7 per cent and a contribution from acquisitions of 0.9 per cent.
It said the outlook for the remainder of 2017 was positive and reiterated full-year guidance of 7-10 per cent growth in adjusted earnings per share, constant currency, with growth weighted to the second half of the year.
“Glanbia delivered good revenue growth in the first three months of 2017,” managing director Siobhán Talbot said, noting Glanbia Nutritionals was the main driver of growth.
She said the group’s performance-nutrition business delivered in line with expectations, as a strong performance in non-US markets countered some challenges in the US market.
Co-op chairman Henry Corbally said: “The proposed creation of Glanbia Ireland is an exciting development for Glanbia farmers.”
“It brings the strong portfolio of Glanbia’s Irish dairy and agribusiness assets into majority co-op ownership while building on the strong partnership with Glanbia plc,” he said.
