Ireland-based dairy group Glanbia has lowered its earnings forecasts for 2009, as a result of deteriorating global dairy markets.
The company revised its guidance for adjusted earnings per share of between US$0.30 to $0.32 for the full year, compared with current market expectations of $0.36 to $0.37.
Glanbia’s 2008 adjusted earnings per share were $35.86, compared to $30.25 in 2007.
Since the announcement of the group’s 2008 full-year results on 4 March some key global dairy markets have deteriorated further, Glanbia said, hitting the group’s Irish food ingredients unit. Glanbia had previously forecast that the unit would break even in 2009.
The deterioration has had “serious implications” for farm incomes and purchasing power, Glanbia said. Therefore, a further decrease in farm input sales and profits is expected for the company’s agribusiness unit.
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The group’s board has committed to make available a fund of EUR8m (US$10.6m) for milk suppliers, which can be drawn down by way of loan in 2009 and repaid over a three-year period.
John Moloney, group managing director, said that while the revised guidance was “disappointing”, the company is focused on achieving a “strong operational and cost management performance in 2009”.
“These are difficult times for the global dairy sector with market prices at historic lows,” Moloney said. “In the longer-term, we are confident of Ireland’s ability to have a sustainable and profitable dairy sector, but this will require restructuring across the industry.
Glanbia said all other aspects of its business was performing well, with food ingredients US experiencing good demand and performing in line with expectations.
Nutritionals is achieving “good organic growth”, Moloney said, and Optimum, the sports nutrition business Glanbia acquired last August, is on target for its expected full-year contribution.