First-half profits at Glanbia will be hit by rising energy costs and cutbacks in EU subsidies for dairy farming which have knocked profits in the milk processing business, shareholders were told yesterday.
But the Kilkenny-based company said growing international operations, especially in the US and Nigeria, should help to ensure that full-year results are "in line with expectations".
Analysts expect the company to report adjusted earnings per share of 21.7-22.3 cent, a four to seven per cent increase on 2005.
Speaking at the group's annual meeting, managing director John Moloney said that, despite difficulties in Ireland where "electricity costs are 30 per cent higher than the EU average" and "retail markets are challenging", good progress is being made with dairy processing and cheese manufacturing plants in Idaho and New Mexico.
The company has already become one of the top four producers of American cheddar cheese and expects US sales of around $350 million (€272.2 million) next year.
A joint venture in Nigeria with British company PZ Cussons, producing powdered and evaporated milk, is heading towards annual sales of $100 million, he said. Glanbia believes that Nigeria, with a population of 140 million and strong oil revenues, presents a good growth opportunity.
The group has also opened a sales and marketing office in Shanghai.
On the domestic front, Mr Moloney said that new shops called CountryLife, selling a range of equestrian, pet-care and gardening products, are already operating at four company-owned pilot sites in Kilkenny, Laois, Kildare and Wexford and will be extended to nine additional locations by the end of 2006.
He said a specialist "property portfolio management" unit would continue to dispose of disused property and land in rural areas in the east of the State.
The company, which employs 4,000 people - more than 3,000 of them in Ireland - also confirmed that its pension deficit increased by €35 million last year to €149 million but that a 10-year funding proposal involving increased employee contributions has been implemented to "sort this out". Shares in Glanbia closed four cent, or 1.6 per cent, lower at €2.47 yesterday.
The well-attended meeting at Kilkenny's Lyrath Estate Hotel was picketed by dairy farmers from Waterford who were protesting Glanbia's decision to cease cheddar cheese production last year at Kilmeaden, close to Waterford.
Following the meeting, the Glanbia Co-operative Society Ltd, which owns 54.8 per cent of Glanbia plc, held a closed meeting.
Farmers who have been smarting over recent price cuts of six cent a gallon in the price they have been paid for milk, demanded a high price for their product.
The co-operative members continued their discussions late into last evening on reducing their holding in Glanbia plc to raise up to €22 million to support the milk price.
The co-op board did not need the approval of the meeting to carry out this plan but must hold a special general meeting to approve distribution of the proceeds of the shares released on the market.
