Glanbia sports nutrition products grapple with competition

Glanbia has said it sees sales growth of its branded protein bars, shakes and other sports nutrition products easing this year, as it deals with strong competition in this multibillion-dollar market in the US.

The key global performance nutrition (GPN) unit, which accounts for more than 40 per cent of group earnings, delivered a 10.9 per cent increase in revenues for the first nine months of the year, helped by its acquisition last year of ThinkThin, a US firm which specialises in protein bars.

However, Glanbia said on Wednesday it expected full-year like-for-like branded revenue growth in this key division would be in the “low-single digits” per cent, with strong volume growth offset by declining prices for its products. Branded GPN sales grew by 5.6 per cent in 2015.

The Kilkenny-based group controls 12-13 per cent of the world’s €10 billion global sports nutrition market, with best-selling brands such as Optimum Nutrition and BSN.

On a call with analysts, Glanbia group managing director Siobhan Talbot said that while GPN had typically led the market in pushing through price increases, it was currently concentrating on maintaining market share and would make a call on pricing next year.

Weak results

Heading into the results, shares in Glanbia were trading 25 per cent below their peak in March, weighed down most recently by a weak set of results last week from GNC Holdings, a leading global retailer of health and wellness products which stocks the Irish group’s products.

Still, Glanbia rebounded by as much as 5.7 per cent in morning trading in Dublin, to €14.80, as investors took comfort in the group reiterating its full-year forecasts and the fact that downward pricing pressure for GPN products is easing, according to analysts at French brokerage Exane BNP Paribas.

The group said it continued to forecast adjusted earnings per share growth of 8 per cent to 10 per cent on a constant currency basis for the full year.

For the first nine months, total group revenue, including joint ventures and associates, dipped 0.4 per cent, though it rose 0.2 per cent when foreign exchange movements were stripped out.

Revenue in the global nutritionals business declined 0.8 per cent, while sales in Dairy Ireland posted a 3.3 per cent reduction and the contribution from joint ventures and associates dropped 6.6 per cent.

Still, Glanbia’s comments on the three segments have improved since the group reported first-half results in August.

Glanbia sees the global nutritionals business delivering earnings before interest, tax and appreciation (Ebita) and margin improvement for the full year, due to growth of both diary and non-dairy value-added ingredient sales.

This represents a more positive outlook, compared to the group's previous guidance for a "modest" improvement in previous commentary, according to Jack Gorman, an analyst with Davy in Dublin.

“A moderate improvement in Ebita is also now expected from Dairy Ireland and joint ventures/associates; previously, the outlook was for a broadly flat performance,” he said.