Glanbia Ingredients Ireland takes profit hit

27-Feb-2015 - Last updated on 27-Feb-2015 at 11:01 GMT

Glanbia chalked up annual sales of £2.5bn

Turbulent dairy markets hit profit margins at Glanbia Ingredients Ireland (GII) in the past year, although sales continued to grow and the development of a major milk processing venture remained on track.

Announcing results for the year to January 3, Glanbia said it planned to open GII’s €150M (£110M) milk processing plant at Belview, County Kilkenny, Ireland, in March, after investing an extra €35M (£25.7M) there.

“The investment of €150M in the milk processing plant at Belview was completed on time and on budget,” the company reported in annual results published today (February 25). “The official opening will take place in March 2015 prior to the removal of EU milk quotas in April.

“Reflecting confidence in the future of the Irish dairy sector, GII recently announced an additional €35M capital expenditure investment to further upgrade the Belview site to produce value-added ingredients for the infant formula sector.”

Plummeting prices

GII drove up annual sales, but profit margins were hit by plummeting dairy commodity prices, Glanbia reported.

Meanwhile, Glanbia added: “Dairy Ireland delivered an improved performance in 2014, driven primarily by consumer products. Revenues declined 5.4% reflecting a 2.2% decline in volumes and a 3.2% impact from lower pricing.”

However, that business achieved a 25.8% increase in pre-tax profit margins, fuelled mainly by increased efficiencies in its Consumer Products unit.

Glanbia reported 11.1% annual pre-tax profit growth on revenue up 6.4% in constant currency terms, from £2.4bn to £2.5bn.

‘Double digit growth’

“I am pleased to announce the fifth consecutive year of double digit growth for Glanbia in 2014,” said group md Siobhan Talbot. “Our focus on two scale growth platforms, global performance nutrition and global ingredients, continues to drive earnings …

“In performance nutrition our investment in brand growth, innovation and acquisitions drove a strong performance. Our Global Ingredients business delivered a satisfactory overall performance in the context of challenging dairy market dynamics in 2014.”

Continued efficiency measures in Dairy Ireland were expected to underpin a further improvement in performance, the company said.

In December, Glanbia announced it had opened a £6.2M milk protein facility at its existing site at Virginia, County Cavan, which supplies the milk for Baileys liqueur, among other products.