Glanbia interim gains exceed €1bn

One of the Republic's biggest food businesses indicated yesterday that consumers could soon be paying more for milk.

Consumer foods and ingredients specialist Glanbia said rising dairy prices helped boost its revenues for the first six months of the year by 13 per cent to €1.04 billion, up from €923 million in the same period in 2006.

Profit before tax was up 28 per cent at €38.6 million, from €30.2 million. A high proportion of Glanbia's business comes from supplying milk-derived ingredients to other food processors, and high world milk prices have boosted this type of activity.

It is also one of Ireland's biggest suppliers of consumer dairy products, under brands that include Avonmore and Yoplait.

But the cost of the raw material itself is on the way up. The milk used to produce products such as cheese and butter costs 35 cent per litre, compared to 26 cent a few months ago.

Farmers and processors are negotiating the price of the liquid milk used to produce the pasteurised product sold to consumers. This price will be set for a year, and is likely to increase in line with the market.

Glanbia chief executive John Moloney yesterday said the price of milk on international markets was up 40 per cent, and Ireland was going the same way.

"We will have to recover that," he said. He added that the price of milk sold to consumers had been on the rise "worldwide". In a statement accompanying yesterday's results, Glanbia said a key issue for its Irish consumer foods business, which includes dairy products, was the "timing of the recovery from the marketplace of higher milk cost".

Year-on-year operating profit from that business was down 1.6 per cent at end of June at €8.33 million, from €8.47 million in 2006.

Food ingredients and nutritionalswas one of the main drivers of growth, with revenues up 23 per cent at €621.3 million, from €504.9 million. Operating profits more than doubled to €28.4 million from €12 million.

During the six-month period, Glanbia delivered a 26 per cent increase in earnings per share, to 11.47 cent from 9.12 cent in the first half of last year. The board is proposing to pay an interim dividend of 2.5 cent a share, up 5 per cent from 2.38 cent a unit at the halfway mark last year.

The company announced later yesterday that director, Matthew Merrick, bought 1,000 Glanbia shares for €3,940, bringing his total stake to 2,600 units.