Glanbia is a "robust" business that is likely to emerge from the current market challenges "in good health", a leading industry analyst has suggested.
Cathal Kenny of Davy was commenting as Glanbia posted a 17.0% increase in wholly-owned revenues in the first quarter of its financial year, to 4 April.
'Good Demand'
In a statement, Glanbia said that it reported 'good demand' across its Glanbia Performance Nutrition (GPN) and Glanbia Nutritionals (GN) businesses. Reported revenue, taking into account the stronger US dollar/euro exchange rate, was up 20.2% on the corresponding period in 2019.
Notably, Glanbia added that it has experienced 'limited operational disruption' due to the COVID-19 epidemic, and that it remains focused on protecting the health and safety of its employees, continuity of supply, and maintaining a 'strong financial position'.
"Glanbia’s Q1 IMS confirms a positive start to 2020 across both platforms with supply chain durability a key feature," Davy's Kenny said in a briefing note.
"As expected, full-year guidance has been withdrawn while the business has augmented its strong liquidity position. Determining the shape of forecasts for FY20 is a challenge – our intuition is to adopt a prudent stance and lower FY20 EPS forecasts to c.80c (from 86.8c), driven by lower dairy markets (US Cheese and JVs) and International branded sales, where visibility is low.
"We believe the fundamentals of the business are robust and expect it to exit the current dislocation in good health."
Demand Volatility
Elsewhere, analyst Jason Molins at Goodbody said that while Glanbia has "delivered a strong Q1 performance", the coronavirus outbreak has led to increased demand volatility, particularly within its Glanbia Performance Nutrition business.
"Consequently, Glanbia has withdrawn its previous guidance for a flat outcome yoy, noting the difficulty in modelling consumer behaviour in the short-term," he said.
"At this juncture, our forecasts remain under review until we have greater clarity around the potential impact of COVID-19, though we believe the risks are skewed to the downside."
'Continuity Planning'
In its trading update, Glanbia said that the coronavirus was having an impact on its GPN business in international markets, and that it was putting in place 'continuity planning teams' to deal with the continued impact of the epidemic.
Commenting on the company's quarterly performance, Siobhán Talbot, group managing director, said, “Overall demand in our key end markets was positive in the first quarter, however greater volatility in consumer shopping behaviour was evident in recent weeks arising from COVID-19 and due to uncertainty of duration and impact of this pandemic, full year 2020 financial guidance is withdrawn.
"The COVID-19 pandemic is a human tragedy and our priorities are to protect our people, provide essential food supplies and maintain our strong financial position. Our nutritious products and ingredients are essential for our consumers and to date all of our plants have largely operated to plan and maintained supply."
© 2020 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
