Glanbia PLC GLB Interim Management Statement

  Glanbia PLC (GLB) - Interim Management Statement

RNS Number : 4942Q
Glanbia PLC
07 November 2012
 



                                       

                         INTERIM MANAGEMENT STATEMENT

                                       

                                       

        FULL YEAR results EXPECTED TO BE AT the UPPER END OF GUIDANCE

                                       

yes recommended by glanbia board to irish dairy processing joint venture votes
                                 IN NOVEMBER

                                       

 

7 November 2012 -  Glanbia plc ('Glanbia'),  the global nutritional  solutions 
and cheese group, is issuing  this Interim Management Statement in  accordance 
with the reporting requirements of the EU Transparency Directive, for the nine
month period to 29 September, 2012. 

 

Commenting today, John Moloney, Group Managing Director said:

"The Group continues  to perform  well driven  by positive  overall trends  in 
Global Nutritionals and results broadly in line with expectations elsewhere in
the business. We are confident that full year results will be at the upper end
of guidance, representing circa 10% growth in adjusted earnings per share on a
constant  currency  basis.  2012  is  expected  to  build  on  the   excellent 
performance of Glanbia in the last two years and reflects both our  successful 
international growth  strategy and  strong  operational execution  across  the 
Group.

 

A key project  this year  has been reaching  agreement on  the proposed  Irish 
dairy processing Joint Venture with Glanbia Co-operative Society, our majority
shareholder. This transaction  offers a new  model for post  quota growth  for 
Glanbia milk suppliers and  underpins a potential 60%  expansion of our  Irish 
dairy processing capacity. Voting to  approve the transaction will take  place 
in the  coming weeks,  with a  strong 'yes'  recommendation from  the  Glanbia 
Board. I believe this is the best route to deliver the next phase of growth in
both our Irish and  international businesses and to  create further value  for 
shareholders, including Glanbia Co-operative Society."

 

Market commentary

In the first half, milk supply outpaced good demand from emerging markets  and 
global dairy market prices declined to  the middle of the year, compared  with 
strong prices in 2011. Growing concerns about the US drought and its impact on
milk production that emerged in the third quarter reversed this price  decline 
in recent weeks.  For the remainder  of the year,  greater price stability  is 
expected in a balanced market with good supply and demand characteristics  and 
the outlook is broadly positive to year end.

 

Business performance (on a constant currency basis)

Total Group revenue including Joint Ventures & Associates to 29 September 2012
grew marginally when  compared with  the prior year  as growth  in the  Global 
Nutritionals businesses  was offset  by  a decline  in  revenue in  the  Dairy 
Ireland business segment.  Group operating  profit and margins  for the  first 
nine months were  ahead of prior  year underpinning the  expected delivery  of 
circa 10% growth in adjusted earnings per share for the full year 2012.

 

Revenue for US Cheese &  Global Nutritionals to 29  September 2012 grew by  9% 
relative to  2011. While  volume growth  was positive  in US  Cheese,  revenue 
declined due to  lower cheese  prices particularly in  the first  half of  the 
year. The Global Nutritionals  business grew by 20%  in the period with  price 
growth across all three nutritionals businesses and continued volume growth in
the  Performance  Nutrition  and   Customised  Premix  Solutions   businesses. 
Ingredient Technologies business continued to benefit from higher whey  prices 
in the period, however, managing this  whey input cost within the  Performance 
Nutrition business remains the key challenge  for Glanbia. The outlook for  US 
Cheese & Global Nutritionals  is positive with good  performance in the  first 
nine months expected to  continue for the rest  of 2012 resulting in  revenue, 
operating profit and margin progression for the full year.

 

Revenue for Dairy Ireland to 29  September 2012 declined 4% relative to  2011, 
largely driven by  lower revenue in  Dairy Ingredients Ireland  which in  turn 
reflected a  combination of  lower  dairy markets  and  lower volumes  in  the 
period. Despite this,  a solid performance  is expected for  the full year  in 
Dairy Ingredients  Ireland. Consumer  Products and  Agribusiness performed  in 
line with expectations. While 2012 revenues for Dairy Ireland are  anticipated 
to be lower,  overall profit  performance is  expected to  be just  marginally 
behind 2011, representing a good result in the current market environment.

 

Revenues for Joint Ventures & Associates for the first nine months of 2012 are
behind prior year as volume growth in Southwest Cheese and Glanbia Cheese  was 
offset by impact of lower cheese prices. While profits in Southwest Cheese are
ahead of prior year,  this is more  than offset by the  impact of higher  milk 
input costs within Glanbia  Cheese. As a result,  the Group's share of  profit 
after tax for Joint Ventures & Associates for 2012 is expected to be below the
prior year.

 

Joint Venture Proposal Update

The Group  has signed  an  agreement with  Glanbia Co-operative  Society,  its 
majority shareholder,  to enter  into  a 40%  (Glanbia): 60%  (Society)  Joint 
Venture in respect of its Irish dairy processing operations. This  transaction 
is well advanced and is now at  the stage of both Society and plc  shareholder 
approval. Society members are scheduled to  vote on 13 November with a  simple 
majority required for approval. The  meeting of plc shareholders is  scheduled 
for 20 November.

 

Contingent on the approval of the Joint Venture transaction, the Society  will 
also be  seeking approval  from  its members  to  reduce its  shareholding  in 
Glanbia to 41.4%. Voting on this proposal will take place on two separate days
before the  end of  the year,  requiring 75%  approval from  eligible  members 
present and voting on the day.

 

Development update

Glanbia  has  invested  circa  €110   million  on  acquisitions  and   capital 
expenditure year  to date.  This amount  includes the  acquisition of  Aseptic 
Solutions for US$60  million (€50 million)  in July, the  construction of  the 
Customised Premix Solutions plant  in Germany which  was commissioned in  July 
and the  recently  opened  whey  protein  isolate  plant  in  Ballyragget,  Co 
Kilkenny.  We  are  currently  evaluating  our  options  with  regard  to  the 
reinstatement of our  flax manufacturing  capability following a  fire at  our 
Canadian facility earlier  this year  and we  expect to  be in  a position  to 
announce our plans shortly.

 

Financing

Glanbia's net debt as at  29 September 2012 was  €585 million with rolling  12 
month adjusted EBITDA  to net  debt at  2.2 times  (HY 2012:  2.3 times).  The 
Group's committed debt facilities total €824.9 million, and comprise of €320.0
million bank facilities maturing in July 2013, €190.0 million bank  facilities 
maturing in  January  2018,  €63.5 million  cumulative  redeemable  preference 
shares maturing in  July 2014 and  a US$325 million  (€251.4 million)  private 
debt placement maturing in June  2021. Discussions regarding the extension  of 
the maturity date  of the  €320.0 million bank  facilities from  July 2013  to 
January 2018 are expected to be concluded shortly.

 

Constant currency basis

Glanbia's financial results  are exposed  to movements in  the Euro/US  dollar 
currency exchange rate. To reflect the underlying performance of the business,
the Group uses constant currency as  a basis for discussing financial  results 
and providing earnings guidance. The 2012  full year average exchange rate  is 
forecast to be circa  €1=$1.28. This would compare  with the average  exchange 
rate for 2011 of €1=$1.39 and represents  a depreciation in the Euro of  circa 
9%.  On this basis, there would  be a positive translation impact on  adjusted 
earnings per share for  2012 of circa  8%. Based on  our updated guidance  for 
2012 of adjusted earnings per share growth of circa 10% on a constant currency
basis, this would  result in reported  adjusted earnings per  share growth  of 
circa 18%.  

  

Outlook

Glanbia is confident of delivering 2012 adjusted earnings per share growth  of 
circa 10%,  on  a constant  currency  basis, which  is  at the  upper  end  of 
guidance. The Group will announce its full year 2012 results on Wednesday,  13 
March, 2013.

 

Ends

 

 

 

 

For further information contact

 

Glanbia plc +353 56 777 2200
Siobhán Talbot, Group Finance Director

Shane Power, Group Investor Relations Manager +353 56 777 2244

Geraldine Kearney, Corporate Communications Director + 353 87 231 9430

 

Murray Consultants +353 1 498 0300

Pat Walsh + 353 87 2269 345

 

Cautionary Statement

This announcement contains forward-looking  statements. These statements  have 
been made by the Directors in good faith based on the information available to
them up  to the  time  of their  approval of  this  announcement. Due  to  the 
inherent uncertainties,  including both  economic  and business  risk  factors 
underlying  such  forward  looking  information,  actual  results  may  differ 
materially  from  those   expressed  or  implied   by  these   forward-looking 
statements.  The   Directors   undertake   no   obligation   to   update   any 
forward-looking statements contained in this announcement, whether as a result
of new information, future events, or otherwise.

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
IMSEAFFKEELAFAF -0- Nov/07/2012 07:00 GMT