Glanbia Ireland delivers profit in line with targets for 2018

Glanbia Ireland has reported a profit after tax of €57.8 million for 2018, which is in line with the targets set for the business and approved by shareholders.

Highlights

• Sales of €1.81 billion
• Profit after tax of €57.8 million
• 2.7 billion litres of milk processed (+5%)
• Milk price average of 36.9 cent per litre
• Very successful year of delivery in 2018 despite challenges
• Ongoing investment in facilitating growth
• New continental cheese joint venture
• The Glanbia Connect website won the coveted "Website of the Year” at the Retail Excellence Awards.
• Very high uptake of the Glanbia Extended Credit Scheme, whereby Glanbia Ireland with support from Glanbia Co-op allowed customers to defer payment for qualifying purchases on an interest-free basis.

Glanbia Ireland is a joint venture 60% owned by Glanbia Co-operative and 40% by Glanbia plc, the global nutrition group.

As approved by shareholders in 2017, 50% of Glanbia Ireland profit is distributed annually to shareholders. An interim dividend of €28.9 million will be paid in April 2019. Glanbia Co-op, which is the 60% shareholder, will receive a dividend of €17.4m. This dividend is ring-fenced for distribution to active farmers and is paid out to Co-op shareholders through the Trading Bonus Scheme and a range of other support payments.

Glanbia Ireland Chief Executive Jim Bergin said that 2018 was an extremely challenging year for Glanbia farmers, with an extended winter period leading to a fodder crisis in the spring, followed by a drought in summer resulting in substantially higher feed bills. The weather conditions resulted in milk volumes being 0.5% behind 2017 for the first half, and over 10% ahead of 2017 in the second half. The final outcome was milk supply growth of 5.12%.

Sales of feed and fertiliser were extremely strong due largely to the weather conditions, but an increase in market share in key feed categories was also recorded.

“The Glanbia organisation provided strong support for our farmers through a very challenging year. It was a superb team effort by drivers, branches, technical staff and farmers to come through the year so well,” he said.

The average milk price paid by Glanbia in 2018 was 36.9 cent per litre. Jim Bergin said that, when all relevant schemes were included, Glanbia was confident that it would maintain its relative position in the 2018 KPMG Milk Price Review. In recent weeks, over €11m was paid to Glanbia milk suppliers by the Co-op as part of the 2018 Trading Bonus Scheme.

In March 2018, Glanbia Ireland announced a major expansion at its Belview milk powder plant with an investment programme of €125 million in order to expand milk processing capacity at that site. This investment is currently on track and will be operational for the peak milk supply period in 2019. Jim Bergin said that Glanbia Ireland has invested €343 million since 2015 to increase peak milk processing capacity.

Glanbia Ireland has recently asked all of its milk suppliers to complete a detailed Census in order to determine the likely milk supply growth in between 2019 and 2023.

On 22 January 2019, Glanbia Ireland announced plans to enter a strategic partnership with Royal A-ware, a leading global cheese and dairy producer in the Netherlands, to build a new cheese manufacturing facility in Belview at a cost of approximately €140 million. The new facility is scheduled for commissioning in 2022 and will produce continental cheeses in various formats.

Jim Bergin highlighted the huge economic contribution that dairy makes to the rural economy. He said that Glanbia paid out approximately €157m for milk to dairy farmers in Co Waterford in 2018, money which is re-circulated in the rural economy to huge economic benefit.

Table 1: 2018 milk payments by county (€)

First Published 14 March 2019