Foods group Glanbia has recorded half-year results in line with a profits warning last June, with pre-tax profits before exceptional charges down almost 45 per cent at #24.7 million (£19.4 million). Sales declined nearly 8 per cent to #1.4 billion (£1.1 billion).
Exceptional charges of #92.7 million - particularly the loss on the sale of the British liquid milk business to Express Dairies and the writeback of goodwill - meant, however, that the final pre-tax figure was a loss of #68.1 million (£53.6 million).
Glanbia operating profits fell almost 35 per cent to #44 million, with poor results from consumer foods and food ingredients more than offsetting a good recovery in the group's pig-meat operations and its agri-business division.
Glanbia has been radically changed since Mr Ned Sullivan took over as managing director earlier this year - both in terms of business focus and management - and Mr Sullivan said: "I am satisfied that the many initiatives under way are building a solid platform for sustainable growth in the future. We are reshaping the group around businesses that have strong market positions and which offer real development potential."
Margins in the group's dairy-based food ingredients business in the Republic suffered from the continued imbalance between farm gate milk prices and world market prices, with Glanbia committed to paying 3p over the industry average to its milk suppliers for another year under the terms of the Avonmore-Waterford merger agreement. A strong performance by the US ingredients division did not compensate and operating profits slumped more than 40 per cent to #12.5 million. Consumer food profits suffered from the difficulties in the British liquid milk business - since sold to Express - with operating profits collapsing by almost 64 per cent to #13.5 million. A strong performance in Glanbia's pizza cheese and food service operations failed to counteract the virtual collapse in profits from liquid milk.
In the first half of 1998, operating profits from Glanbia's pig-meat operations collapsed. But the most recent six months has seen a strong recovery, with operating profits up from #680,000 to #9 million.
Glanbia's balance sheet has improved as a result of the asset sales, with net debt at the end of the half year totalling #442 million compared to #513.7 million 12 months previously. At this stage, the rationalisation of Glanbia's operation has been completed and businesses like liquid milk in Britain sold off.
Finance director, Mr Geoff Meagher said the current year would see £100 million (#127 million) invested in the business with the focus shifted to businesses where Glanbia had a number one or two position in the market. He added that he believed the days of profits warnings from Glanbia were now past.
