Glanbia's operating profits grow by 40% to €66.3m

A RETURN to profitability by Glanbia’s Dairy Ireland division helped push operating profits at the food group up by almost 40 per cent to €66.3 million in the first half of the year.

Overall revenue for the first six months of 2010 rose by almost 10 per cent to €1.06 billion – €1.2 billion when the company’s share of revenue from its joint ventures is included.

Adjusted earnings per share increased by just over 50 per cent to 18.62 cents per share, while the company raised its dividend by 5 per cent to €3.03 per share.

The strong first-half performance prompted the company to revise upwards its guidance for earnings per share growth for the full year to 20 per cent.

A rebound in global milk prices together with the implementation of cost-cutting measures accounted for the better-than-expected turnaround in profits at the company’s Irish dairy division, which saw operating profit jump from €5.9 million to €19.1 million. Margins rose from 1.1 per cent in the first half of 2009 to 3.5 per cent in the six months to July 3rd, 2010.

Dairy Ireland, which comprises the company’s dairy ingredients, consumer products, and agri-business divisions in Ireland, accounts for 44 per cent of Glanbia’s overall revenue, and 25 per cent of operating profit.

According to chief executive John Moloney, the strong performance by the ingredients sector was offset by a weaker consumer products sector.

Glanbia’s Global Nutritionals business also performed well in the first half of the year, with operating profit at the US cheese and global nutritionals business increasing by 5.8 per cent.

The company said yesterday there was “no further update” on the proposed disposal of the Irish dairy and agri businesses, which was defeated by co-op members at a meeting in May.

Mr Moloney said the company’s strategy was not affected by the defeat of the proposal. He said the strategic logic behind the deal from the plc’s perspective was that it would allow the company to concentrate on the high-growth areas of the business.

He said that any further developments on the deal would be a matter for the co-op and not the plc.