Food group Glanbia has reported a 19% drop in pre-tax profits for the year ending December 2009, in what it called a very challenging environment.
Glanbia said its pre-tax profits fell to €97.4m from €120.3m while revenues declined by 18% to €1.83 billion from €2.232 billion.
The board is recommending a final dividend of 3.95 cent per share, a 5% increase from the 3.76 cent per share in 2008. This brings the total dividend for the year to 6.84 cent per share, also up 5% on the 6.51 cent per share the previous year.
Meanwhile, Glanbia's 54.6% major shareholder - the Glanbia Co-operative Society - ís in talks to buy Glanbia's Irish operations. These consist mainly of dairy ingredients, consumer products and agribusiness.
The farmer shareholders and co-op members would gain control of the key businesses that relate to them, leaving the company to concentrate on its US and international businesses, cheese and nutritionals.
A statement says talks are progressing well, and any decision would need shareholder approval.
'The discussions are underpinned by a clear strategic rationale and represent a unique opportunity to transform Glanbia,' the statement added.
14 of the plc's 18 board members are nomimated by the co-op but will not be involved in the discussions. The Irish Farmers' Association has decribed the move as a 'welcome development'.
Glanbia was formed 13 years ago from two co-ops, Avonmore and Waterford, who had both gone to the stock exchange to secure additional investors in the 1980s. But the original co-operative always remained in place, retaining a 55% share in Glanbia.
Farmers have frequently been complaining about the prices Glanbia paid them and staged protests last year.
Extreme volatility in global dairy markets
Glanbia said the global economic recession last year led to 'extreme volatility' in global dairy markets in the first half of the year, which led to a significant impact on the company's revenue, profitability and earnings.
'We contained the decline in our financial results with a strong performance by Global Nutritionals, a resilient performance by US Cheese and the benefits of strategic cost reductions. This cost competitiveness focus will continue into 2010,' the company's CEO John Moloney said.
The company said that 2009 was a year of negative returns for Irish dairy processors and farm suppliers due to the scale and pace of market changes in the first half of the year. The deep consumer recession here also resulted in an extremely competitive food retailing environment.
Revenues at Glanbia's Dairy Ireland operations fell by 23.3% to €1.028 billion while operating profits slumped by 51.7% to €24m after what the company called a challenging year. The division is made up of three business units - dairy ingredients, consumer products and agribusiness.
It said its Irish Dairy Ingredients performance was severely impacted as raw materials costs did not fully reflect the fall in product prices on global markets. However, it continued to develop its product portfolio through diversification of its cheese product mix, entering new cheese markets and developing protein technologies.
Glanbia said its Consumer Products division delivered a 'reasonable performance' in a very competitive market place. It said the recession here led to a strong consumer focus on price, while a weaker sterling increased sterling-based competition.
Meanwhile, reduced farm incomes led to a weaker sales performance from its agri-business unit. In response to market conditions, the unit reshaped its sales organisation.
Glanbia's US Cheese and Global Nutritionals business saw a 6% decline in revenues to €792.4m, while operating profits rose by 7.4% to €90m. It said its US cheese business delivered a solid result in the context of market circumstances and a very strong 2008 cheese pricing environment.
The global nutritionals business had a strong year, which the company said showed its resilience against the global economic recession.
Glanbia also said that revenues from its joint ventures and associates division fell by almost 20% to €297.6m while operating profits rose by 2.4% to €17.4m.
'Whilst the outlook remains challenging, we are seeing some positive signs in our operating environment which should underpin our performance in 2010,' the company's CEO John Moloney.
Glanbia shares closed down 2.7% at €2.53 in Dublin.
