Irish performance-nutrition and ingredients group Glanbia plc has announced a seventh year of double-digit earnings growth, as well as the proposed sale of 60% of Dairy Ireland, its branded consumer dairy-product and agribusiness arm.
Last year, total group revenue rose 1.3%, excluding currency fluctuations, to €3.7 billion. Its EBITA was €349.8 million, an increase of 12.8% in constant currency.
Wholly owned revenue grew 2.8% in constant currency, up €2.8 billion, with an EBITA increase of 12.5%.
Capital expenditure for 2016 totalled €89.5 million, of which €57.1 million was invested in strategic capital expenditure. The lion's share of capital was spent on advancing innovation, putting the finishing touches on its high-end cheese and whey facilities in Idaho, in the US, and other unnamed systems implementations.
Siobhán Talbot, the managing director of the group, said, “I am pleased that Glanbia had a strong group‐wide performance in 2016, delivering our seventh year of double-digit earnings growth, coupled with strong cash conversion.
"It has been an exciting start to 2017, with a number of key strategic initiatives progressing, which will shape the future direction of the group."
Dairy Ireland
The company also announced that it had signed a memorandum of understanding to sell 60% of Dairy Ireland to Glanbia Co-operative Society Ltd, the group's dairy cooperative.
Under the agreement, the Dairy Ireland segment will be integrated with Glanbia Ingredients Ltd, creating a new entity, called Glanbia Ireland.
The agreed enterprise value of Dairy Ireland is approximately €340 million.
The society will also gain a 60% interest in the segment's net of pension obligations, but excluding working capital for €112 million.
The new entity will continue the 'significant' investment programme, which has 'the ambition to leverage the benefits of the significant growth plans of the Irish dairy supply base with an ownership structure more aligned to the needs of that supply base', and will invest approximately €250-€300 million to that end between 2017 and 2020.
The deal is dependent on final negotiation of transaction-related agreements and approval by Glanbia and Society shareholders, and it is expected to be completed by mid-2017.
Glanbia Acquisitions
In the last two months, Glanbia acquired Grass Advantage LLC, which markets organic and non-GMO plant-based nutrition brands. It also agreed to acquire B&F Vastgoed BV in the Netherlands, an online performance-nutrition business, which it hopes will be completed in the first half of 2017. The combined consideration for both additions is roughly €181 million. The 2016 net for both companies was €99 million.
In January, the company also announced the creation of a joint venture to build a large-scale cheese and whey facility in the state of Michigan. Glanbia will own 50% of the project, and Dairy Farmers of America, Inc., the Michigan Milk Producers' Association and Foremost Farms US will own the other half of the venture.
The total project cost is pegged at €400-€425 million, and the plant will be commissioned in late 2019.
Looking forward to 2017, Glanbia has forecast an adjusted EPS growth for the group between 7% and 10% in constant currency on a pro-forma basis.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. Click subscribe to sign up to ESM: The European Supermarket Magazine.
