Glanbia has seen wholly-owned EBITDA for the first half of the year decline by 25.4% at constant currency levels, as the business saw a contrasting performance across its two main divisions.
Commenting on the group's performance, analysts Davy Stockbrokers said that Glanbia's EBTIA performance was around 5% behind its forecast for the period.
Mixed Performance
Half-year revenues rose 2.3% at the business, to €1.8 billion (up from €1.76 billion a year earlier), with its Glanbia Performance Nutrition (GPN) business taking a significant hit due to the impact of the coronavirus crisis.
Revenue at the division fell by 15.6% to €532.4 million, while EBITA was down 58.2%.
Glanbia said that the implementation of lockdowns as a result of COVID-19 severely impacted the GPN business, 'as routes to market in many countries were essentially closed', however it delivered a 'robust performance' in North America, with signs of improvement continuing into July.
Glanbia Nutritionals (GN), meanwhile, saw revenue up 12% to €1.3 billon in the half-year period, however EBITA was down 6.8%.
'Glanbia Nutritionals traded in line with the prior year as the breadth of the portfolio across key consumer nutrition segments enabled the business to optimise opportunities in areas such as general health and immunity while navigating more challenging end market conditions for certain ‘food-to-go’ brand customers,' the company said.
It added that its core GN portfolio 'continues to trade well' into July 2020, however some 'food to go' makes may take longer to recover due to the evolution of the pandemic.
Elsewhere, Glanbia has announced the purchase of Canadian 'flavour designer' Foodarom, for CAN$ 60 million (€38.4 million).
Health And Wellbeing
Commenting on Glanbia's performance, group managing director Siobhan Talbot said, "Our compelling belief is that consumers' increasing focus on health and wellbeing, as well as greater importance on trust and quality, positions Glanbia well for the future, given our core purpose of the delivery of better nutrition via our brands and ingredient solutions.
"While the short term outlook remains uncertain, the Board is confident that Glanbia has the portfolio, the consumer insight and the operational expertise to succeed in this new environment.”
Glanbia added that it withdrew its 2020 financial guidance back in April, as the COVID-19 pandemic gained pace, and the guidance remains withdrawn as of its current position.
Analyst Viewpoint
In a briefing note, Davy analysts Cathal Kenny and Roland French said, "Headline EBITA was c.5% behind our forecast, driven by Glanbia Performance Nutrition (GPN). International route-to-market challenges persisted through the period driving significant negative operating leverage, with GPN margin delivery of 3.7% (Davy: 5.0%). Of note, GPN EBITA in North America was broadly flat year-on-year (yoy). Glanbia Nutritionals delivered a resilient performance, with US Cheese the stand-out.
"On first glance, our FY 2020 EBITA expectations look too optimistic, driven largely by our GPN margin forecasts (10%). Model adjustments are likely to prompt a c.10% revision to our full-year EPS forecast, constant currency."
© 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
