Decision on funds for new Glanbia milk plant imminent

A DECISION on how Glanbia will finance a major new milk-processing plant will be made by the end of next month, shareholders were told yesterday.

About 140 Glanbia shareholders gathered for the company’s agm in Kilkenny yesterday, at which the company reiterated its full-year guidance of 5-7 per cent growth in adjusted earnings per share.

Glanbia chairman Liam Herlihy, a representative of the co-op that is the plc’s 54 per cent shareholder, said Glanbia co-op and the plc were “evaluating possible options” with their respective advisers on how best to pursue milk-processing expansion opportunities ahead of the abolition of EU quotas in 2015.

It is understood some of the options being discussed are the possible sell-off of some of the co-op’s 54 per cent shareholding in the company, and the financing of the new plant by some or all of Glanbia’s milk suppliers. Glanbia also held exploratory talks with Dairygold earlier this year on a possible tie-up. A new greenfield plant is likely to be located in the south east of the country.

Glanbia’s managing director John Moloney said yesterday any decision on expansion would have to be “consistent with supporting overall the value that has been driven by the plc over recent years”. There was “an important need to get the model right” as Glanbia was the biggest milk processor in the country, he added.

In an update to the market yesterday, Glanbia said it expected to deliver first-half earnings “which are broadly similar to an exceptionally strong first half in 2011”.

Revenue in the first three months of the year was up 1.9 per cent compared to the same period in 2011, though volumes were down 1.5 per cent, with growth in the company’s global nutritionals business offsetting lower volumes in its other main divisions, Dairy Ireland and Agri-business.

The company’s US Cheese Global Nutritionals division experienced a 9 per cent jump in revenue in the first three months of the year.

While cheese prices were lower, volumes held up well, the company said. Glanbia’s global nutritionals business, which produces whey and protein-based ingredients and products for the sports nutritionals and nutraceuticals (products with health and medical benefits) market, experienced an increase in both volume and value.

Glanbia’s Dairy Ireland division, which accounted for 41 per cent of total revenue last year, declined 4.6 per cent in the first quarter, mainly as a result of quota restrictions on producers.

Mr Moloney said global milk prices had weakened because supply was outstripping demand.

However, he stressed the “underlying story is still good”, noting continued demand from the developed world.

More than 20 Glanbia pensioners – many former senior management at the company – protested outside yesterday’s agm over Glanbia’s decision to cease paying an agreed 3.5 per cent annual increase in their pension payments this year.

The group, which had worked for Waterford Foods before its merger with Avonmore to form Glanbia, agreed in 1992 to forgo a 4 per cent wage increase in lieu of a 3.5 per cent increase in pension payments.

More than 30 former employees are planning a High Court action against the company.