Glanbia revealed a strategic review, "to prioritise growth
opportunities", as it unveiled its first results statement since selling
control of its historic Irish dairies division, and foresaw "good" prospects
The cheese and ingredients group said that it had "clarified"
its outlook by in November disposing of most its stake in the dairy business, which
is now focused on exploiting an expected hike in Irish milk production
following the abolition of European Union quotas.
The business, now booked as an associate company to Glanbia,
is planning to boost its milk processing capacity by 60% through a E170m
Glanbia said the deal had reduced its "overall exposure to
global dairy markets, and potential earnings volatility", a factor which
analysts said had been holding back the group's stockmarket rating.
Glanbia said it was not reviewing its long-term strategy, to
form a "strategic roadmap" for the next decade, in which it would assess the "growth
potential" within the remaining operations.
"We are in a stronger position than ever to capitalise on
the competitive advantages we have in high growth markets," the company said.
"Our focus in 2013-14 will be to refresh the group's
strategy so that we prioritise growth opportunities in terms of a long-term
plan, and focus our investment on the areas of highest potential growth and
The group highlighted the potential for its "well-established"
operations selling ingredients and nutritional products, based largely on
Indeed, Glanbia said it was to "develop and evaluate"
potential acquisitions, "with a focus on the nutritional businesses".
The comments came as the group unveiled a 22% rise in
underlying earnings per share for 2012, on revenues up 14.4% at E2.21bn.
At 56.56 euro cents, earnings per share beat market
expectations of a 53-cents-per-share result, and reflected "strong"
performances in ingredients and nutritional products, with the US cheese
business held back by lower average prices over the year.
Glanbia forecast growth of 8-10% in earnings per share in
2013, from a base level of 51.02 cents per share factoring in the dairy
disposal, implying a result in line with the 56 cents a share that investors
"The prospects for 2013 are good, although we remain
cautious given the global environment," chief executive John Moloney said.
The group forecast lower prices of many dairy raw materials,
such as lactose and "high end" whey, despite the firming in industry commodity
prices as evident at the latest GlobalDairyTrade auction.
The statement was welcomed by Dublin stockbroker Davy, which
said that "Glanbia could not have begun its strategic transformation in better
style, with stronger-than-expected growth in 2012 and a positive growth
expectation for the current year and thereafter".
The broker restated an "outperform" rating on Glanbia
NCB said the results were roughly 3% ahead of expectations,
and said that guidance of earnings growth this year "reflects confidence in a
continued strong performance in global nutritionals despite the current
The broker also said that "future earnings should suffer
lower volatility following the dairy spin-off", noting that Glanbia shares are
trading at about 15.3 times this year's earnings, compared with a sector
average of 16-17 times.
Glanbia shares closed 1.4% lower at E8.38 in Dublin.