Glanbia, the Irish dairy and nutrition group, has today (18 November) cut its earnings target on the back of a "deterioration" in the performance of its domestic dairy business.

The company has forecast that its 2009 adjusted earnings per share will reach between 30 and 31 cents, which it said is at "the lower end of market expectations". In August, Glanbia set a target of 30 to 32 cents.

A "major, first-time loss" within Glanbia's Irish dairy ingredients unit has hit sales and profits from its domestic dairy operations.

"The deterioration in the performance of this business unit is the principal reason for the forecast year-on-year decline in adjusted earnings per share for Glanbia," the company said. 

The group then issued a mixed assessment of the rest of its domestic business.

"The Irish food retail market is still very challenging but against this backdrop [our] consumer products [division] is expected to deliver a reasonable performance. Agribusiness will be weaker than 2008 reflecting the difficulties in farming this year."

In August, when Glanbia published a slump in half-year profits, MD John Moloney said the group was taking an "aggressive" look at its domestic business and hinted that cost cuts were planned.

Today, in its trading update, Glanbia said it was "continuing to focus on delivering sustainable cost reductions and a review of the competitiveness of Dairy Ireland is currently underway".

Meanwhile, the company added that sales from its US cheese and global nutritionals division were forecast to be down on 2008.

However, Glanbia said a "robust" performance from its US cheese business and a "good result" from its nutritionals unit would lead to a "modest improvement" in operating profit and operating margin.