Glanbia - earnings outlook adjusted

Glanbia - earnings outlook adjusted

Ireland-based dairy and sports nutrition group Glanbia has cut its earnings outlook for the rest of this year after a "disappointing" first half for its performance nutrition arm.

Announcing its first-half results today (31 July), for the six months to the end of June, Glanbia said for 2019 its adjusted earnings per share is expected to be between EUR0.88 (US$0.98) to EUR0.92, assuming foreign exchange rates remain at current levels. The company said those earnings would equate to a fall year-on-year of 3-7% on a constant-currency basis.

In April, Glanbia's guidance was that adjusted earnings per share were expected to grow between 5% and 8%.

Jefferies analyst Martin Deboo pointed out that the midpoint of the new outlook's range is around 7% below the current consensus among analysts covering the business.

Shares in Glanbia were down 13.68% at EUR11.99 at 09:10 BST.

Glanbia said the cut was driven by a revised outlook for its Global Performance Nutrition (GPN) business.

"GPN expects momentum to increase significantly in the second half of 2019, however some of the global trade-related challenges in certain international geographies seen in the first half of the year are expected to continue thereby reducing the overall result in GPN for the year," it said in a stock-exchange filing.

Siobhán Talbot, Glanbia's group managing director, added: "Glanbia Performance Nutrition had a disappointing first half, reflecting a number of factors including, business seasonality, consumer channel shift in Europe and difficult global trade dynamics in key international markets. Overall while we have positive momentum across many parts of the group, this has increased our caution for the remainder of the year."

Deboo said: "Glanbia is buying itself some much-needed latitude to manage the business for the longer term. If that results in a more sustainable and less seasonal growth trajectory for GPN, the shares have potential to re-rate. An opportunity that shouldn't be squandered."

First-half revenue from the performance nutrition business rose 19.3% to EUR620.1m, boosted by sales from SlimFast, acquired last year. However, EBITA from the division slumped 30.2% amid "negative operating leverage, negative price and increased investment focused on lifestyle brands and the direct-to-consumer platform", Glanbia said.

Overall, Glanbia's revenues for the six-month period were EUR1.75bn, up 19% year-on-year. The company's "wholly-owned" EBITA was EUR111.4m, down 9.9%. Net profits were down 15.2% at EUR83.3m.