Shares in global nutrition group Glanbia sank by over 20% today after it warned that it expects earnings to fall by up to 11% this year, hit by a longer than expected rise in the cost of whey, a key raw material.
The company also announced that it will sell its underperforming US weight management brand SlimFast as part of a wider plan targeting annual cost savings of at least $50m by 2027.
Glanbia reported a 6.8% increase in full-year adjusted earnings per share (EPS) to 140.03 cents, in line with its guidance, allowing it to increase total dividends for 2024 by 10% and approve a further €100m of share buybacks.
However, it forecast that EPS would fall to between 124 and 130 cents this year, driven by a $200m increase in the cost of producing its performance nutrition products, cutting the division's profit margin to 13-14% from 16.9% in 2024.
The company said that peak whey prices are now predicted to continue into the second half of 2025, having previously expected them to begin to fall in the second half.
Finance chief Mark Garvey said Glanbia now expects whey costs to turn at the end of 2025 and into 2026 as supply increases.
"What it actually means is the peak cost we're going to see now in high-end whey in 2025 will be 20% higher than the peak cost we saw post-Covid," Garvey said.
Glanbia took a non-cash impairment charge of $91.4m in its 2024 results to reflect SlimFast's performance challenges and the decision to begin the sale process. SlimFast represented 7% of its performance nutrition division at the end of June.
The US-focused company bought SlimFast for $350m in 2018, but sales of its products have plummeted since 2022 as weight-loss drugs upended the diet market and consumers moved away from the low-carbohydrate diets that the 50-year-old brand supports.
The group-wide transformation programme also includes a new operating model with three divisions - Performance Nutrition (PN), Health & Nutrition (H&N) and Dairy Nutrition (DN).
Glanbia said its group revenue for 2024 rose by 5.8% to $3.839 billion on a pro-forma and constant currency basis from $3.640 billion in 2023.
Its group pre-exceptional profit after tax increased by 4.1% to $310.3m from $298.1m in 2023.
The Glanbia Board is recommending a final dividend of 23.33 US cent per share which brings the total dividend for the year to 38.97 US cent per share, a 10% increase on 2023.
Hugh McGuire, Glanbia's chief executive, said the company had a strong performance in 2024 diven by growth across its portfolio of better nutrition brands and ingredients.
"Optimum Nutrition and Isopure, our protein growth brands, delivered double digit volume growth in the year and we saw good growth across our premix and protein solutions businesses within Nutritional Solutions," the CEO said.
He noted that Glanbia increased its dividend by 10% and returned €102m to shareholders via its share buyback programme, including €2m of a €50m buyback programme announced in November 2024 which is ongoing and authority for an additional €100m of share buybacks announced today.
"We continue to evolve and optimise our portfolio, which included the acquisition of Flavor Producers in April and the decision to exit the Body & Fit business and the SlimFast brand," he added.
Glanbia has started a multi-year group-wide transformation programme, first announced in to drive efficiencies and support the next phase of growth.
This includes setting up a new operating model, delivering productivity initiatives, and further optimising its portfolio, targeting annual cost savings of at least $50m by 2027.
Hugh McGuire said these actions are designed to drive focus, unlock value and position Glanbia for its next phase of growth.
"Looking ahead to 2025, we will focus on continuing to drive performance across our portfolio of better nutrition brands and ingredients, while navigating short-term input cost inflation. In FY 2025, we expect adjusted EPS to be in the range of 124 cent and 130 cent," he added.
Meanwhile, Glanbia's chairman Donard Gaynor has informed the Board of his intention to retire from the Glanbia Board at the conclusion of the company's annual general meeting in 2026
Shares in the company ended lower in Dublin trade today.
