CHEESE MAKER and nutritional ingredients group Glanbia warned yesterday that lower world demand for dairy products due to the global economic crisis would result in “difficult trading conditions” in 2009.

Glanbia confirmed that adjusted earnings per share (eps) growth would increase by approximately 17 per cent for 2008, in line with market expectations.

“We are very cautious at this early stage of the year. However, we remain focused on achieving the market consensus earnings growth for 2009,” group managing director John Moloney said in a trading update to investors.

Glanbia’s Irish division, which includes a consumer foods operation in addition to agribusiness and property interests, traded “well” despite a “challenging market environment”, the company said, with the consumer foods business enjoying a recovery in margins.

But its Irish food ingredients business was “significantly impacted by a steep decline in world dairy prices and, as a result, the imbalance between market pricing and raw material cost” in the second half of 2008.

The US food ingredients operation and global nutritionals business was boosted by the earnings contribution from Optimum Nutrition, the US sports nutrition firm Glanbia acquired for $315 million (€239 million) in August 2008.

Overall for the full year, the performance of the international division, which includes the Irish ingredients business, will be broadly in line with 2007.

The group also profited from an “excellent” performance from its joint venture, Southwest Cheese, in the US.

However, world dairy markets are increasingly volatile, with prices continuing to decline.

“2009 is set to be a very challenging year,” said Mr Moloney.

Glanbia’s share price fell 16 cent to €2.69, down 5.6 per cent.