Glanbia shares slumped by as much as 7 per cent on Wednesday after the Kilkenny-based food group reported lower revenue and profits for the six months to the end of June.
Chief executive Hugh McGuire blamed the slide in earnings on “pricing noise” while noting the company recorded volume growth in the two main segments of the business, Glanbia Performance Nutrition (GPN) and Glanbia Nutritionals (GN).
In its latest half-year results, Glanbia said group revenue fell by 1.1 per cent to $1.82 billion (€1.46 billion) on a constant currency basis while profit after tax fell to $143.3 million, down from $193.4 million the same time last year.
Earnings before interest, tax, depreciation and amortisation (ebitda), however, rose by 12.8 per cent to $261.6 million driven – in the main – by volume growth across its performance nutrition brands including its top-selling Optimum Nutrition label. Adjusted earnings per share (EPS) were also up 12.4 per cent.
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Mr McGuire noted that the company now held a 15 per cent market share of the $25 billion global sports nutrition market and that its Optimum Nutrition brand was the number one brand in that market, with sales exceeding $1 billion last year.
Sales of Optimum Nutrition, which accounts for 65 per cent of Glanbia’s GPN business, grew in volume terms by 12 per cent over the six-month period, which Mr McGuire described as “exceptional”.
The use of protein powders had extended way beyond “gym bunnies”, he said. “What we’re seeing is a broadening of the pathway ... consumers are introducing more protein into their diet and understand the benefit of it,” he said.
The company’s GPN business saw volume growth of 3.1 per cent during the six-month period, with prices falling by almost 4 per cent, resulting in a 0.8 per cent slide in revenue on a like-for-like basis.
Glanbia’s nutritionals (ingredients) business had similar metrics, with volumes increasing by 3.1 per cent and prices falling by 3.9 per cent, resulting in a 0.8 per cent revenue decline.
[ Glanbia hands top executives shares worth close to €6mOpens in new window ]
“Our earnings growth was driven by a strong performance in GPN, with volume growth, earnings and margin reflecting strong consumer demand,” Mr McGuire said.
“Our strong operational and financial performance continues to support our capital allocation framework, with the interim dividend increased by 10 per cent and €50 million returned to shareholders via share buy-backs,” he said, noting the company was launching a further €50 million share buyback programme.
“Looking ahead, we continue to focus on driving growth across our portfolio of great brands and ingredients. The category trends remain positive, and with the continued consumer and customer demand for our ‘better nutrition’ brands and ingredients we will see a sequential improvement in volumes across GPN and NS [Nutrition Solutions] in the second half of the year,” Mr McGuire said.
The company reiterated its full-year earnings guidance of 5-8 per cent growth in adjusted EPS.
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