Glanbia Ireland, the joint venture between Glanbia co-op and Glanbia plc, saw a 22% rise in operating profits to €73.4m mainly as a result of the full-year effect of the purchase of the consumer foods and agribusiness from Glanbia plc in 2017. Revenues increased 29% to €1.8bn as a result of the acquisitions. Milk volumes increased 5% to 2.7bn litres last year after being back 0.5% at the first half followed by a 10% surge in the second half. Glanbia now has 25% of its milk in fixed milk price schemes.

Stock values at year end increased 28% to €309.2m, mainly as a result of the enlarged business. The group balance sheet at year end showed total shareholder equity was €409.5m.

The group had net debt of €319.6mm, an increase of €32.7m on the end of 2017. Average debt levels had increased due to capital investment and higher working capital requirements, especially towards the end of the year.

Turnover from the ingredients business fell by 4% to €1.1bn as a result of a 1% increase in sales volumes but price deflation of 5%. It said it had also made good progress on expanding the group’s consumer brands internationally. The agribusiness division had revenues of €447.3m last year. The company said that the sales of feed was up 40% due to the weather conditions and that it had gained market share.

Cheese production

It is estimated that around 40% of its cheese production, which takes 800-900m litres of milk, is destined for the UK market. The business has been investing away from core cheddar production. Glanbia Cheese is building a mozzarella production facility in Portlaoise. It has also entered into a partnership with Dutch cheese processor Royal A-ware to build a new cheese facility in Belview which will cost €140m. This will come on stream in 2022. Glanbia is currently investing €125m in Belview in order to expand milk processing capacity at the site. This will be operational to process peak milk in 2019.

Operating margins were a healthy 4.1%. The business generated cash of €106.2m last year – up from €84.9m in 2017. Debt to EBITDA fell from 3.38 times to 3.01 times during the year. Overall the business made a net profit after tax of €57.8m. This reflects the agreed margin of 3.2% the business must make for its shareholders.

The model ensures that €28.9m or 50% of the profits after tax are held in the business for future investment and expansion. The other 50% is paid as a dividend to the parents. This sees Glanbia plc receive €11.5m from its 60% shareholding while Glanbia co-op will receive €17.4m. This portion generates the funds which the co-op uses to reward shareholders who are active farmers through either milk price supports or trading bonuses.