Food group Glanbia has lowered the outlook for its earnings for this year due to a further deterioration in some key world dairy markets.
Glanbia says that it now expects earnings per share of 30 to 32 cents for the full year, compared with market expectations of 36 to 37 cents. The company had reported adjusted earnings per share of 35.86 cent in 2008.
Glanbia said that since it delivered its 2008 results in March, some key global dairy markets have deteriorated further. It said this had affected its Irish food ingredients division, which had been forecast to break even this year.
Glanbia said that while it has reduced its manufacturing milk price, the cost it was paying was still above the level at which the business could break even.
Glanbia said it has decided to sustain this loss as it believes it is an important step in help maintain its Irish diary supply and trading base. It also said it has committed to make available to farmers a fund of €8m to manufacturing milk suppliers, which can be drawn down by way of a loan this year and repaid over three years.
The effect of the decline in world markets has also had serious implications for farm incomes and purchasing power, Glanbia said. To this end, a further decrease in farm input sales and profits is expected for the agribusiness unit also.
However, Glanbia says all other aspects of its business are performing well. Its Food Ingredients USA is reporting good demand and performing in line with expectations, while its nutritionals unit is seeing good organic growth.
It said its consumer foods unit is delivering a 'reasonable performance in very challenging market circumstances'.
'These are difficult times for the global dairy sector with market prices at historic lows,' commented Glanbia's group managing director John Moloney.
'While it is disappointing to announce revised earnings guidance, we are focused on achieving a strong operational and cost management performance in 2009,' he added.
Shares in Glanbia closed down 15 cent at €2.19 in Dublin.
