Glanbia planning to spend €200m on acquisitions

DAIRY AND nutritional ingredients company Glanbia will spend up to €200 million on acquisitions this year as it seeks to develop its interests in the high-margin specialist dairy ingredients industry.

The food group, which yesterday announced a 23 per cent climb in pre-tax profits to €74.4 million, said it had enjoyed "an excellent year" in 2007 despite facing a time lag in recovering the cost of higher milk prices in its Irish consumer foods division.

It attributed its performance to strategic investment in a greater spread of businesses, which meant it was also able to benefit from strong global dairy markets.

Glanbia group managing director John Moloney said the company was currently targeting two acquisitions, one in the US and one in Europe.

It is investing in new regional sales headquarters in Singapore, while a new vitamins and minerals plant in Shanghai has begun taking orders from infant formula manufacturers.

Operating profits in Glanbia's consumer foods division fell 27 per cent to €17 million before exceptional items, which included an exceptional charge of €20.4 million relating to its exit from the pigmeat industry.

Sales in the consumer foods division were flat overall, as a 6.7 per cent growth in dairy and chilled foods sales was dragged down by a collapse in pigmeat revenues following a fire at its processing plant in Edenderry, Co Offaly.

Growth in consumer foods was driven by demand for value-added nutritional beverages, a market in which Glanbia's Avonmore brand is the leading player.

In its agribusiness division, feed volumes fell but by less than the market average, leading to gains in market share.

Turnover in the ingredients and nutritionals division, which includes its US cheese business, soared 30 per cent to €1.4 billion, with operating profits before exceptionals up 93 per cent to €85 million.

Mr Moloney said Glanbia, which is the biggest supplier of cheddar-type cheese in the US, was capitalising on the weakness of the dollar on currency markets.

"People have concerns about the dollar, but from our point of view, it is opening up new export markets from the US," Mr Moloney said.

GLANBIA RESULTS

Pre-tax profits:€76m (+22.8 per cent)

Operating profit:€92.4m (+26.3 per cent)

Revenue:€2.2bn (+19 per cent)

Adjusted earnings per share:28.2c (+25 per cent)

Total dividend per share: 6.08c (+5 per cent)

SUMMARY

Profits and margins in its consumer foods division plummeted as it was hit by a lag in recovering higher milk prices, but its climb up the "dairy value chain" more than made up for these "agflation" difficulties. Healthy growth in its international ingredients and nutritionals division meant it gave shareholders an expectation-beating increase in adjusted earnings per share