FOOD GROUP Glanbia said yesterday that its businesses were performing in line with expectations despite signs that consumers were becoming “increasingly value-conscious”.

However, it also said in an interim management statement (IMS) to the stock market that lower consumer demand due to the changing global economic environment meant it would undertake a rationalisation programme across its businesses, which will have an exceptional cost of €16 million this year.

Glanbia, which comprises an Irish consumer foods operation and an international cheese manufacturing and nutritional ingredients group, said the market remained “challenging” in its Irish division, but that it was trading “satisfactorily” in the second half of the year. Ongoing cost improvements and cost recovery in the division had improved margins and operating profits, the group said.

Demand for cheese in the US has remained strong while its nutritional ingredients business will benefit for the first time from an earnings contribution by Optimum Nutrition, which Glanbia bought in August for €256 million.

Its joint venture in New Mexico with Southwest Cheese is delivering an “excellent performance”, Glanbia said.

Food sector analyst John O’Reilly, from Davy Research, noted that milk output in New Mexico, Idaho and Texas – the three US states where Glanbia has milk processing operations – grew faster in October than in the US overall. This continued a trend which had been evident for some time and it could encourage increased investment in Glanbia’s US operations, Mr O’Reilly said.

Glanbia said the group continued to maintain strong debt to earnings and interest cover ratios.

Glanbia fell 6 per cent in trading on the Iseq yesterday, closing down 14 cent at €2.24.