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Glanbia has reported a double-digit decline in profits for its 2019 financial year after a very challenging 12 months for its flagship performance nutrition business.
On Wednesday morning, Glanbia reported earnings (EBITA) of €240m for 2019, which was down 16% compared to the previous year. Earnings margins in the business weakened from 9% in 2018 to just 6.2% last year. Glanbia incurred exceptional costs of €37m last year, mostly due to a major reorganisation of its performance nutrition division.
Glanbia reported full year sales of just under €3.9bn, which was up 17% year on year and was mostly driven by acquisitions (+10%). The performance nutrition and ingredients giant reported adjusted earnings per share of 88.1c per share, which was down 3% on the previous year and at the lower end of Glanbia’s earnings guidance, which it revised downwards in July.
Disappointing
Siobhan Talbot, group managing director of Glanbia, said it was disappointing that its performance nutrition business had eroded group profits.
“It was disappointing that earnings were impacted by challenges in the Glanbia Performance Nutrition segment and to address these we have conducted a comprehensive business review and are taking actions to simplify our business, allowing us to concentrate on our core brands, and optimising our routes to market across channels and geographies. As a result, we expect GPN to regain branded revenue growth momentum in 2020,” said Talbot.
Dividend
Glanbia said it will pay a full year dividend of 26.62c per share for 2019, which is up 10% year on year and will see almost €79m returned to shareholders. This will see just under €25m paid out to Glanbia co-op, which owns 31% of Glanbia plc.
Glanbia also announced on Wednesday morning that it would seek shareholder approval to commence a share buyback programme in 2020.
Performance nutrition
Last year was a really challenging year for Glanbia’s flagship Performance Nutrition division. While sales grew by 11% to just under €1.4bn, earnings in the business plunged almost 20% year on year to €146m. Profit margins in this business were just 10.7% last year and a long way from the 16% profit margins it could boast back in 2016.
Glanbia blamed the fall in profits on lower sales volumes, increased marketing costs and weaker sales of branded products. The company said it will attempt to improve the profitability of its flagship division in 2020 by exiting low-margins businesses, ceasing contract manufacturing in the US and by prioritising its Optimum Nutrition brand, which achieved global sales of just over €600m last year.
Nutritionals
In contrast to the struggles of the Performance Nutrition division, Glanbia’s Nutritionals division, which encompasses its US cheese and ingredients solutions businesses, posted a strong performance in 2019.
Total sales for the division grew by 26% last year to just over €2.5bn, driven by a 6% increase in sales volumes and an 11% rise in prices. The rise in ingredients and cheese prices last year reflected stronger dairy markets, said Glanbia.
Earnings in the division grew by 17% last year to just over €130m, although earnings margins narrowed slightly to 5.2%.
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