The revival in dairy prices has driven Glanbia's troubled Irish milk processing business - the country's biggest - back into the black, putting the group on track for "strong" interim results.

The maker of cheese for the likes of Burger King and McDonald's said that its Irish dairy ingredients business, one of the assets which the company attempted to sell for some E300m in the spring, had "benefitted from a sustained improvement in global dairy markets throughout the first six months 2010".

The performance contrasted with the unit's first-ever loss last year, a decline which fuelled an attempt by Glanbia to dispose of the business, and some other Irish assets, to the group's biggest shareholder, the Glanbia Co-operative Society.

The plan fell through in May when it failed to receive adequate backing from co-operative members.

'Very tough half'

Conditions remained difficult for some parts of the Glanbia empire, with its Irish consumer products arm, which sells branded milk, spreads and soups, suffering a "very tough first half".

"The Irish retail environment continues to be extremely competitive, and operating margins in this business in the first half were impacted by higher milk costs and the effects of price reductions implemented at wholesale level," Glanbia said.

However, the group's American division had achieved a "good result", notable in the ingredients and micronutrients unit, which had enjoyed "strong organic growth across all business segments".

And with joint ventures in Nigeria, the UK and the US also improving, Glanbia said it was "on track for a very strong first half performance relative to 2009".

Broker reaction

The statement prompted Paul Meade, at Dublin-based broker NCB, to restate a "buy" rating on Glanbia shares.

"The turnaround in Irish dairy ingredients, and positive market trends in the US businesses, should offset any weakness in Irish consumer products," Mr Meade said.

The stock closed 1.3% higher at E3.16 in Dublin.