Nutritionals a bright spark beside Glanbia's dull dairy ingredients
driving gains in operating profits for its ingredients division and
staving off the impact of another challenging year for dairy.
The food ingredients and nutritionals division of the Irish food group reported operating profit of €44.2m for full year 2006, up three per cent on 2005.
But sales slipped three per cent to €1.08bn, due to lower market prices for ingredients in Ireland and the USA.
The 20 basis point increase in operating margin, to 4.1 per cent, was attributed mainly to an increased contribution from nutritionals.
Ingredients, on the other hand (cheese, butter, casein and protein) suffered particularly in the first half of the year.
EU dairy mid term review, now in its fourth year, is "having a significant and unpredictable effect on the sector and continues to squeeze operating margins and impact performance," Glanbia said.
As for nutritionals, Glanbia benefited from increased capacity in whey in Idaho, in vitamins and minerals in Germany, and in beverages and powders in the UK.
The acquisition of Seltzer in the US for a total consideration of US$105m is one of the company's milestones for the year.
The acquisition gave the company's growing international customised formulation activities a third arm, alongside its UK and German activities, and marked its first entry into the US specialty chemicals market.
Its previous US operation dealt only with whey ingredients.
It came on the back of heavy investment in custom formulation presence in Europe; in July 2006 it acquired UK-based Pro-Fibre Nutrition, now known as Glanbia Nutritionals UK, and in 2004 German-based Kortus Food Ingredients Services (KFIS).
It is also extending its reach into Asia Pacific, with a €5m plan to build its first nutritional operation.
The facility, located in Shanghai, China, is expected to be completed next year.
Glanbia's international focus for nutritionals is conspicuously in line with its increasingly international approach to business.
"We are successfully developing a strategic international presence, which today represents newly 40 per cent of the group's revenue and profits," said group managing director John Moloney.
"This gives Glanbia a strong platform from which to continue to grow and develop overseas."
Glanbia has three divisions: consumer foods, agribusiness and property, and food ingredients and nutritional. Revenue for the group as a whole was up one per cent in 2006 to €1.85bn.
Pre-exceptionals operating profit was up six per cent to €85.6m.
