Editor's viewpoint: Glanbia has stamina
Glanbia has ambitions to build "global" sports nutrition brands
The 2013 results posted by Irish food group Glanbia stood out, both for the growth the company achieved last year and its optimism for its prospects this year and beyond.
Glanbia, with operations that span consumer dairy brands in Ireland, a global ingredients arm and an ever-more international sports nutrition business, saw sales and profits rise in 2013, it said last week.
The company's "performance nutrition" arm, which includes its sports nutrition brands, reported EBITDA that was up almost a quarter on 2012. Growth from that division and Glanbia's global ingredients business helped offset tumbling earnings from the company's Irish consumer brands.
The group said it expected 2014 "to be another positive year" and provided an indication it sees earnings per share climbing around 8-10% between 2014 and 2018, which sent its shares rising.
Yesterday, Glanbia MD Siobhán Talbot outlined the company's plans at the Consumer Analyst Group of Europe conference in London.
Addressing an audience of analysts and investors, Talbot expects what she called Glanbia's two "global growth platforms" - performance nutrition and global ingredients - to "drive the business forward".
Talbot said the performance nutrition division could capitalise on increased consumer interest in diet and health. Global ingredients, she argued, stands to benefit from growing customer demand for "higher nutrient density" and "cleaner labels".
The growth prospects of Glanbia's Irish consumer dairy business, which includes Avonmore milk and Kilmeaden cheese, are, Talbot explained, weaker. "They are not suddenly going to become double-digit businesses," she said. However, the Glanbia boss described the business as "solid" and added: "It's about keeping that particular business segment stable as we move forward."
That, in a nutshell, is Glanbia's strategy for growth. And it is a wise one. The underlying trends driving its performance nutrition and global ingredients look set to continue and there is room for Glanbia to expand.
Talbot spoke of Glanbia's "ultimate aim" to build global brands out of its performance nutrition stable, which includes Optimium Nutrition and BSN. Such a statement may seem bold but the sector remains fragmented and Glanbia has seen its initial efforts to roll out the brands internationally stick.
Glanbia's Irish consumer dairy business is its smallest by sales and margins are the lowest of its four units. Managing the division seems a cogent strategy. With the business facing a tough retail environment in Ireland, one could argue Glanbia could sell the division, although some industry watchers say Glanbia has indicated plans for some growth overseas, with the end of EU dairy quotas in 2015 set to lead to a jump in Irish milk production.
There are potential clouds on the horizon in the near term in the form of currency fluctuations. Around two-thirds of Glanbia's performance nutrition sales are made in the US, for example. The recent upward pressure on global dairy commodity prices could also be a concern.
However, fundamentally, Glanbia seems set fair.
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