Glanbia appears to have steadied the ship after a rocky few months: a profit warning in February linked to a spike in whey prices; questions over the company’s complex corporate structure; the working out of some bad add-on buys including weight-loss brand Slimfast (the subject of an impairment charge last year); and a near 50 per cent slide in the share price resulted in an angry tete-a-tete with shareholders at the company’s annual general meeting (AGM) in April.
Several called for a strategic review of operations in light of the poor underlying performance and the generous pay and bonuses dished out to executives over the years.
When boss Hugh McGuire presented the group’s half-year results on Wednesday, he was able to raise the company’s earnings outlook, propelling the share price forward and staunching some of the criticism in the process.
[ Glanbia shares jump 15% on back of improved earnings outlookOpens in new window ]
He also announced the sale of the company’s underperforming Body & Fit ecommerce platform as part of move to reduce costs and simplify the business. The imminent sale of Slimfast, most likely at a steep discount to the $350 million paid for it, will make for a more difficult announcement.
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Glanbia is spread across three divisions – sports nutrition, ingredients and dairy.
The last has now been set up as a stand-alone division with a dedicated leadership team, prompting speculation that the company plans to offload it as it focuses on the higher margin sports nutrition and ingredient segments.
Glanbia’s performance nutrition business, centred around its top-selling Optimum Nutrition brand, is key to the group’s wider performance. It drove the share price decline earlier this year.
McGuire noted that the better-than-expected earnings outlook for the year was driven by “increased revenue momentum” in that division in the second quarter.
“Today’s results reflect a first half of significant execution and progress as we generated 6 per cent revenue growth in the period, underpinned by strong growth in health & nutrition and dairy nutrition and a sequential improvement in performance nutrition through the period, as the group navigated significant macroeconomic volatility,” he said.
McGuire is understandably keen to draw a line under the company’s recent woes; the latest results are good start.
