Dairy firm Glanbia posted its half year results earlier than scheduled this morning, with the company reporting a revenue increase of 12.0% in the period, however EBITA took a hit in its Performance Nutrition business.
Commenting on its performance, Glanbia group managing director said, "Overall while we have positive momentum across many parts of the Group, [the performance of Glanbia Performance Nutrition] has increased our caution for the remainder of the year."
Here's how leading analysts viewed its performance:
David Fahy, Cantor Fitzgerald
"Despite the negative stock price performance over the last couple of months these results were a significant surprise to the market as evidenced by the share price reaction today. This was a significant downgrade to earning expectations. Despite management's strong track record, its ability to achieve its medium term goals which were outlined a little over one year ago, will now be questioned.
"Particularly EPS growth and profitability margins guidance. On the call following the release, management consistently answered questions regarding the performance of the GPN business. Issues in Europe and Latin America were new news to analysts as these had been performing well until recently. The explanations regarding the slowdown in the middle east were also lacking. We had not anticipated such weakness within international (ex US) markets as management had been highly confident its growth and profitability.
"While management have deemed this to be an anomaly and a once off, its ability to forecast challenges in certain markets will be questioned."
Cathal Kenny, Davy
"Glanbia has pre-announced its interim results and lowered FY guidance. The warning centres on a revised outlook for its performance nutrition division (GPN) – primarily driven by non-US markets.
"The remaining segments, including recent M&A, are demonstrating positive operating momentum. We expect the equity to remain pressurised until evidence of a sustained rebuild in the GPN profit base emerges. We anticipate moving to the lower end of the new guidance range – which implies a c.10% downgrade to our FY forecasts."
Jason Molins, Goodbody
"Glanbia issued an earlier than scheduled release of its H119 results this morning. Of particular note, the company is now guiding to reported FY19 adjusted EPS of 88c to 92c which compares to our previous estimate of 99.4c. This represents a cut of c.8-12%. The primary driver appears to be a weaker than anticipated outturn and outlook for the non-US part of its Glanbia Performance Nutrition (GPN) division.
"While the overall H119 outturn at the EPS level was broadly in line (36.7c vs 35.9c forecast) this was primarily driven by a better than expected outcome in Associates, while wholly owned businesses were c.10% behind at the profit level.
"Operating profit was c.12% behind however at €64.5m (vs €73.6m forecast) which reflects a 390bps margin decline in NS due to: i) the mix of volume growth; and, ii) the drag of increased tariffs on certain raw materials. In terms of outlook, NS is expected to deliver growth in H2 and FY19 driven by momentum in both dairy and non-dairy solutions, while US Cheese is expected to deliver a broadly flat performance yoy.
"Today’s update is disappointing and breaks Glanbia’s strong track record of delivery against its guidance. We are likely to lower our numbers towards the bottom end of the new guidance range, i.e. 12%."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
