Food group Glanbia today predicted a strong performance for 2010, and said it would acquire US performance nutrition firm Bio-Engineered Supplements and Nutrition (BSN) for €108 million.
In a pre-close trading statement, the company, which is due to announce its full results on March 2nd, said it expected 20 per cent growth in adjusted earnings per share for the year ended January 1st 2011.
It said positive trends seen in the first half of the year continued in the latter months of the 12-month period, as stronger global dairy markets helped boost the firm.
After returning to profit in the first half of the year, the dairy ingredients business showed sustained recovery in the latter half of the year. This helped improve operating profit performance for the Dairy Ireland unit, with good revenue growth compared to the second half of 2009. Strategic cost reduction programmes in Ireland also bolstered operating profit.
“Full year operating profit and margin for Dairy Ireland are forecast to be well ahead of 2009, which was a difficult year for this division,” Glanbia said in a statement.
The group said overall results for its consumer products would be lower than 2009 as “economic difficulties” in Ireland continued to create a challenging trading environment. Agribusiness, meanwhile, is expected to be broadly similar to 2009.
The group’s US cheese and global nutritionals business saw revenue grow strongly in the second half of the year, as a result of improved US cheese markets and strong volume growth in global nutritionals. However, higher milk prices, the refurbishment of the Twin Falls’ cheese plant and lower cheese prices hit the US cheese division and Glanbia expects operating profit to be weaker than 2009.
This offsets a strong performance in global nutritionals, which saw its volume growth outpace the market.
Although operating profit for the US cheese and global nutritionals business is expected to remain comparable to the second half of 2009, Glanbia predicted higher full-year operating profits.
Results at Glanbia’s joint ventures and associates, meanwhile, are expected to be similar to 2009.
The group’s year-end net debt for 2010 is expected to be about €420 million.
Following a review of pension arrangements throughout the year, the group said its net liabilities would be reduced and result in an exceptional credit of about €10 million for 2010. This follows a significant reduction in pension liabilities the previous year.
Looking ahead, Glanbia said adjusted earnings per share growth for 2011 would be in the range of 11 to 13 per cent when its acquisition of BSN was included.
BSN is being acquired on a debt-free basis, and the purchase is funded through Glanbia’s existing banking facilities.
The Florida-based company develops, provides and distributes nutritional products for health, training, physique development and performance.
BSN, which employs 140 people, had net revenue of $135.4 million (€101.3 million) in 2009, and earnings before interest and tax (EBIT) of $10.1 million (€7.6 million). At the end of 2009, the company’s gross assets amounted to $30.5 million (€22.8 million).
Glanbia said the acquisition would “significantly” enhance its performance nutrition portfolio.
“BSN is an excellent strategic fit with our performance nutrition business and adds strong brand and market positions that complement and extend our portfolio,” said group managing director John Moloney.
“Global nutritionals is now a €600 million revenue business, a position we have built organically and by acquisition in just over five years.”
