Foods group Glanbia may sell its loss-making sliced cooked meats business in Britain, which industry sources believe may be worth in the order of £20 million sterling (€32 million).
News of a possible withdrawal from the sliced meats business in Britain came as Glanbia reported an impressive set of results for the year to the end of December. Continuing its recovery, pre-tax profits before exceptional write-offs were up 24 per cent to €66.6 million, while adjusted earnings per share rose 37 per cent to 15.85 cents.
But, while the group's dairy food ingredients and other consumer foods business performed well, it is clear that the British sliced meats business remains a serious problem. Managing director Mr John Moloney said that, while the business is lossmaking because of 30 per cent overcapacity and increased competition, the situation has been made worse since the year-end with the loss of a contract meaning a substantial reduction in volumes from mid-year onwards. Glanbia is carrying out a detailed review of these British operations.
The British sliced meats business was, however, the only blip in an otherwise impressive set of results with earnings coming in about 7 per cent ahead of average forecasts. The best performance were in the Irish and American operations, particularly in the US where turnover was up by more than a third. With sales of €554 million, the Idaho cheese and whey operation is now the single biggest business within the group.
Turnover from food ingredients was up more than 10 per cent to just over €1 billion, while operating profits were 5.2 per cent higher on €59.4 million. The consumer foods business was marked by a strong performance in Ireland countered by the weakness in the UK. Overall, turnover was up 8 per cent to €1.36 billion with operating profits up from €12 million to €20.4 million. But with operating margins of just 1.5 per cent, the need to sort out the problems in the British sliced meats business is clear.
There was a notable improvement in the balance sheet with net debt down by more than €50 million to €243 million. Interest cover improved from 2.9 to 3.5 times.
