Strong results expected from Glanbia despite challenges

Glanbia is due to report half-year results on Wednesday, with strong performance expected, despite a challenging environment in the Global Ingredients and Dairy Ireland divisions.

Davy stockbrokers is forecasting first-half revenues of €1.2 billion, a 4.6 per cent increase year-on-year, and EBITA of €107.5 million, for the six months to July 5th.

In the performance nutrition division, it is forecasting revenues of €375 million, up 17 per cent year on year.

The stockbroking firm expects Glanbia to report flat revenues of €530 million for its global ingredients division, and declining EBITA of €55.5 million. Dairy Ireland earnings are forecast to fall 4.4 per cent year-on-year to €11.5 million, despite climbing revenues.

After a strong performance in the first three months of the year, which saw 38 per cent revenue growth, the performance nutrition division is expected to be the dominant growth driver in 2014, Davy said.

"Overall, the business remains in excellent health, exhibiting an ideal mix of earnings growth, robust returns and capital discipline. With the shares up modestly year-to-date, the stock continues to outperform broader European markets," Davy analyst Cathal Kenny said.

He said Glanbia management has been proactive in responding to the tight milk supply environment by moving its milk suppliers onto long-term contracts.

Revenue at nutrition and ingredients group Glanbia increased 17 per cent in the three months to April 5th, compared to the same period last year, on the back of volume and pricing growth.