Dairy group Glanbia has this morning posted a 7% drop in full-year operating profit before exceptional items, but it said it was on track to deliver 2006 results in line with current guidance.
The company reported operating profit of €80.6m in the 12 months to the end of December. Revenue was up 4% at €1.83 billion in what the company called a difficult year in Ireland. It said its Irish operations continue to be affected by a combination of ongoing EU reform, inflationary pressures and a competitive market environment.
The company said its international operations performed well, with the group's USA food ingredients delivering a 'solid' result, with strong organic growth in the evolving nutritionals business. The group said its joint ventures in New Mexico and Nigeria are progressing well.
Glanbia reported flat pre-tax profits of €68.7m, before exceptionals. Earnings per share amounted to 21.04 cent compared with 21.03 cent in 2004, while adjusted earnings per share rose by 1% to 20.86 cent from 20.59 cent in 2004.
The company's board is recommending a final dividend of 3.24 cent per share, up from 3.09 cent per share in 2004. This brings the total dividend for the year to 5.51 cent per share, up from the 5.25 cent per share dividend in 2004 - a 5% increase.
Glanbia said its Agribusiness division had a difficult year because of poor global grain markets and the changing patterns of farm purchasing. These conditions led to a decline in performance and operating margins. Revenue was up 1% to €229.1m, while operating profits fell by 10% to €10.7m. Agribusiness now operates from 61 locations with nine branches closing last year. 12 were closed in 1004.
Glanbia's consumer foods division, which incorporates liquid milk, chilled foods and pig meat, had a mixed year. It said a good performance from the pig meat business was offset by competitive markets in the liquid milk and chilled foods segments. Revenue for the division was up 9% to €493.6m, while operating profits fell by 3% to €27.1m.
The company's food ingredients division has operations in Ireland and the US and is involved in the production of cheese, butter, dairy spreads and whey protein ingredients. It also includes the group's evolving nutritionals business. Overall revenue rose by 3% to €1.11 billion, while operating profits fell by 8% to €42.7m.
Glanbia said the reduced EU market supports on the Irish based business crystallised in the second half of the year, leading to a significant deterioration in profitability.
Glanbia said it expects to deliver 2006 results in line with current guidance. 'While there are ongoing challenges in Irish operations and unpredictability in energy prices, we expect key cost and product development initiatives in these businesses together with ongoing international development to underpin the 2006 results,' it said in its results statement.
'Growing momentum within the business maintains Glanbia's steady progress towards double digit growth in 2007,' it concluded.
Glanbia shares were down nine cent to €2.66 in Dublin this evening.
