Glanbia shares soar almost 13% on strong results

Nutrition group unveils $89m US deal and board overhaul as profits rise

Glanbia managing director Siobhan Talbot at the company’s offices in Dublin. Photograph: Aidan Crawley/Bloomberg
Glanbia managing director Siobhan Talbot at the company’s offices in Dublin. Photograph: Aidan Crawley/Bloomberg

Shares in Glanbia rose almost 13 per cent on Wednesday to levels last seen almost two years ago as the Irish nutrition group reported better than expected results and unveiled an $89 million (€78.5 million) deal in the United States.

The Kilkenny-based group’s adjusted earnings per share (EPS) rose by 9 per cent to 91.1c, excluding the impact of currency fluctuations, to outstrip the upper end of its previous guidance of 5-8 per cent growth.

“The outlook for 2019 is positive and Glanbia expects to deliver 5 per cent to 8 per cent growth in adjusted earnings per share, constant currency,” said chief executive Siobhán Talbot, adding that if the euro-dollar exchange rate remains at current levels, reported earnings will be 3 per cent higher than the constant-currency forecast.

Revenue from wholly-owned businesses increased by 4.1 per cent on a constant-currency basis to €2.39 billion, while earnings before interest, tax and amortisation (ebita) expanded 5.2 per cent to €284.9 million.

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“Glanbia’s full-year results confirm a strong finish to 2018 and were ahead of forecasts at the revenue, ebita and EPS reporting lines,” Davy analyst Cathal Kenny said, adding that he will have to raise his 2019 estimates.

The market value of the group jumped 12.9 per cent to €5.41 billion.

Acquisition

The group said it has agreed to buy a non-dairy ingredient solutions business based in Connecticut, called Watson, for $89 million. This will be a "highly complementary" addition to its nutritional solutions business and start to contribute to group earnings after the deal is concluded at the end of March, company executives said on an analysts call.

Meanwhile, Glanbia said that it plans to reorganise the composition of its board of directors from May to consist of 16 members, including six independent non-executives and eight non-executives nominated by the Glanbia Co-operative Society.

It plans to appoint three new independent directors, two of whom – a former partner with UK private equity firm Lion Capital partner Mary Minnick and one-time chief executive of Swiss medical devices firm Nobel Biocare Richard Laube – were announced on Wednesday.

The group’s key Glanbia Performance Nutrition (GPN) division, which sells protein bars and whey protein products to gym-goers, delivered 2 per cent earnings before interest, tax and amortisation (ebita) growth on a reported basis, to €173.1 million. This has been helped by the group’s drive to broaden its distribution, to focus increasingly on the mass-market through food, drug and convenience retailers and online sales.

Weight management

The division moved into the multi-billion-dollar weight management sector when it bought SlimFast for $350 million (€308 million) last November. The resurgent brand posted 17 per cent sales growth in 2018.

The Glanbia Nutritionals (GN), comprising US cheddar cheese and a value-added protein ingredients business, posted a 1.5 per cent drop in ebita to €111.8 million.

While Ms Talbot said that GPN and GN are somewhat cushioned from the impact of a possible no-deal Brexit, its Glanbia Ireland and Glanbia Cheese UK joint ventures “may be more significantly” exposed to such a scenario.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times