GLANBIA SAID yesterday it was on track for a very strong first-half performance on the back of a return to profitability in its Irish dairy ingredients unit.
The food group’s Irish ingredients division suffered big losses last year as a result of volatility in the global dairy markets.
In a trading update, Glanbia said the business had benefited from a “sustained improvement” in global markets throughout the first six months of 2010.
However, the company said its consumer products division, which includes its branded milk, butter and fresh dairy products, had a “very tough” half year.
The Irish retail environment remained extremely competitive and operating margins were affected by higher milk costs and the effects of price reductions implemented at wholesale level in the second half of 2009, it said.
Sales in its agribusiness interests performed satisfactorily and the implementation of its rationalisation plan across the Irish dairy businesses continued.
The group said “positive market trends” had boosted sales in its US cheese and global nutritionals businesses. Demand for US cheese remained robust and markets were higher relative to 2009.
“Operating margins for global nutritionals remain resilient, particularly in the context of ongoing investment in developing the performance nutrition brands,” the company noted.
Glanbia said proposals for restructuring its €85.8 million pension deficit over a 14-year timeframe, submitted to the Pensions Board in April, were progressing.
The Pensions Board is, however, unlikely to approve the time span for reducing the deficit. Under Section 50 the regulator requires funding shortfalls corrected within 10 years.
A Glanbia spokeswoman said: “We don’t envisage major changes to the proposals even though we remain in discussions with the Pensions Board.”
The Pensions Board recently extended until November the deadline for these Section 50 applications.
In its trading update Glanbia said its joint ventures in the US, UK and Nigeria also had strong first-half performances.
The company said an $85 million (€67 million) expansion of the Southwest Cheese facilities in New Mexico was completed during the first half and the facility was now operating at capacity.
Glanbia rose 4 cent yesterday to finish the session at €3.16 following yesterday’s update.
The company is due to issue its half-year results on August 25th.
