Morning business news - August 20

Wednesday 20 August 2014 10.51
Morning business news with Brian Finn
Morning business news with Brian Finn

Nutrition and dairy ingredients group Glanbia has reported revenue up over 10% in the first half of the year to almost €1.8 billion. Earnings per share for the six months to the end of June were up nearly 7%. Siobhán Talbot, Group Managing Director of Glanbia, said the performance was very pleasing overall. 

"We delivered strongly relative to our guidance driven by performance nutrition and global ingredients," she said. However, Dairy Ireland had a tough half with revenue down over 7%, due mainly to lower agribusiness sales. "We alluded to some challenges in consumer products and agribusiness in the past in Dairy Ireland. We expect the second half performance to improve," the Glanbia boss said. On falling milk prices, Ms Talbot said it was hard to be prescriptive, but she said there were a number of factors internationally impacting on price, not least of all the ramping up of global milk supply, which came about in response to higher prices in the first place. 

The group announced this morning a €60m capital investment in its Global Ingredients division in Idaho in the US. "We are adding value to the milk pool in the US. This will allow us to develop the high end whey protein products that apply to the sports nutrition segment. We'll also be increasing capability to extract other valuable components from the milk pool to be used in areas like infant nutrition," she said.

On the effect of Russian sanctions, Siobhán Talbot described the development as "unhelpful" but she said Glanbia would keep a close eye on what was happening. "It's an unhelpful development in a market that was starting to show some declines. It is a market for our performance nutrition business, but quite a small one in percentage terms. We're watching it and seeing how it will evolve." The group said it was maintaining its guidance of 8-10% growth in earnings per share for the full year.

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MORNING BRIEFS - Green REIT is set to take ownership of a prime Dublin city centre property at 13 - 17 Dawson Street for €23m. It has indicated its intention to redevelop the site, doubling its existing lettable area.
That would be subject to planning permission.

*** Goodbody Stockbrokers says we can reach a deficit target of less than 3% of GDP without introducing any new austerity measures in the next budget. In its latest economic commentary, Goodbody chief economist Dermot O'Leary says water charges will bring in €0.5 billion. That will leave the Government some room to introduce measures to improve medium-term growth capacity, such as an increase in capital spending and a reduction in the income tax burden. It says average GDP growth will hover around the 3.5% mark over the next three years. And it expects the Government deficit this year to come in at 3.7% of GDP - well below the budget target of 4.8%. This - coupled with extra revenue from the growing economy - would mean the Government would have to do considerably less than €2.1 billion in budget adjustment to bring next year's deficit in below 3%. Goodbody forecasts it will be 2.5% and 1.5% in 2016.

*** Apple shares soared overnight as investors anticipate the introduction of a new iPhone in September. Apple underwent a stock split in June in order to attract more investors. They did that after the share price went over $700 so they initiated a seven for one split where investors received seven new shares for everyone one share they used to own. That brought the share price down to around $100; last night the price went as high as $100.53.

*** Steve Ballmer is leaving the board of Microsoft. He stepped down as CEO of the company in February and now he is also quitting the board after 14 years.  He owns more Microsoft stock than Bill Gates and he won't be stuck for something to do as he bough the LA CLippers basketball team a few months ago.