Shares in Irish food group Glanbia plummeted by over 18 per cent this morning after the company said it expected earnings to fall by up to 11 per cent this year.
The weaker earnings outlook was based on the higher cost of whey, a key input in the group’s suite of protein powder products.
The Kilkenny-based company also announced plans to sell-off its underperforming SlimFast brand, seven years after buying it for $350 million, as part of a wider cost-cutting programme.
The dieting brand has struggled since the advent of weight-loss drugs such as Ozempic. Glanbia reported a non-cash impairment charge of $91.4 million for 2024 related to crashing SlimFast sales in the US.
In its latest full-year results, the company said revenue increased by 5.8 per cent to $3.8 billion last year helped by double-digit sales growth in Glanbia’s leading sports nutrition brands Optimum Nutrition and Isopure while profit after tax rose by 4 per cent to $310 million.
However, its forecast that EPS (earnings per share) would fall back to between 124 and 130 cents this year, down from 140 cents in 2024, driven by a $200 million increase in the cost of producing various performance nutrition products, sent the company’s shares into a tailspin.
By late morning, shares were down by 18 per cent at €11.99.
Glanbia noted that whey prices will be “elevated” in the short term as new supply catches up, resulting in a double digit increase in cost of goods of $200 million for the group’s global nutrition business. “This will be a significant challenge for us in 2025,” it said.
In its report, the company also warned geopolitical tensions and the increased risk of tariff wars “could potentially impact the importation of key raw materials and/or negatively impact on the group’s international sales channels”.
With up to 80 per cent of company’s business now in the US, where it is the lead producer of protein powders and US-style cheddar cheese, chief executive Hugh McQuire said the risk stemmed more from retaliatory tariffs against the US. During the first Trump presidency, Glanbia was forced to shift certain production lines to India and China after they imposed retaliatory tariffs on the US, Mr McQuire said.
“We’ll have to wait and see what gets announced and then we’ll have to navigate that,” he said, while noting the company’s earnings guidance this year does not include any tariff implication.
In its latest report, the company said it was “holding appropriate safety stocks for core raw materials, however a prolonged impact to supply chains, heightened inflation, occurrence of extreme weather events and natural disasters, or a geo-political event in a key trading region would have negative consequences from both a supply and pricing perspective.”
Overall Mr McGuire said the strong performance was “driven by growth across our portfolio of better nutrition brands and ingredients.” He said the decision to sell-off SlimFast was based on “prioritising growth opportunities”.
Mr McGuire also noted the group had “commenced a multi-year group-wide transformation programme to drive efficiencies and support the next phase of growth.”
The board recommended a final dividend per share of 23.33 cent (euro); representing a total 2024 dividend of 38.97 cent; a 10 per cent increase on prior year.
