International expansion has given Irish milk producer Glanbia a buffer against difficulties in its home market and, although the shares are already up by a third since we suggested buying them six months ago, investment in the expansion of its global nutritionals business means there's plenty more growth to come.
After the $144m (£91m) acquisition of US performance nutrition specialist, BSN, in January 2011, Glanbia's global nutritionals business is now the largest contributor to both sales and profits. After growing sales 54 per cent in 2011, management expects another strong performance from the business this year and is investing heavily in new products to further tap into the growing market for healthy living and ageing.
However, that success was partially offset by a 30 per cent jump in whey costs, which it couldn't fully recover through price increases and which saw margins slip 90 basis points. Higher milk prices also affected its US cheese and Irish consumer products, but its Irish business was nevertheless able to increase trading profits by a fifth to €57.9m (£49m) overall - thanks to strong volume growth in dairy ingredients and expansion into emerging markets.
Broker Goodbody expects underlying pre-tax profits of €159m for 2012, giving EPS of 49¢ (€138m and 48¢ in 2011).
GLANBIA (GLB) | ||||
|---|---|---|---|---|
| ORD PRICE: | €5.51 | MARKET VALUE: | €1.58bn | |
| TOUCH: | €5.51-€5.63 | 12-MONTH HIGH: | €5.64 | LOW: €3.55 |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 175¢* | NET DEBT: | 92% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2007 | 2.21 | 76.1 | 20.4 | 6.08 |
| 2008 | 2.23 | 100 | 26.8 | 6.51 |
| 2009 | 1.83 | 143 | 38.5 | 6.84 |
| 2010 | 2.17 | 135 | 36.9 | 7.52 |
| 2011 | 2.67 | 139 | 38.2 | 8.27 |
| % change | +23 | +3 | +4 | +10 |
Ex-div: 28 Mar Payment: 11 May *Includes intangible assets of €467m, or 159¢ a share £1=€1.18 | ||||
