The margin erosion in Glanbia’s performance nutrition business over the last few years has been something to behold. As recently as 2016, this was a business that generated profit margins in excess of 16% and was the jewel in the crown for Glanbia as well as its main engine for growth.

Glanbia’s half-year results this week paint a very different picture.

Profit margins in performance nutrition, which sells a stable of branded sports nutrition products, have narrowed to a meagre 3.7% as profits in the business plunged almost 60% to just under €20m.

Speaking to the Irish Farmers Journal this week, Glanbia group managing director Siobhán Talbot admitted it had been a very challenging few months for the performance nutrition business.

Talbot said the company is seeing a strong U-shaped recovery

After a strong start to the year, Talbot said performance nutrition sales had plunged 30% to 35% during the months of the tightest lockdown restrictions when many of its core customers were locked out of gyms and organised team sports.

However, as restrictions have eased in Europe and the US, Talbot said the company is seeing a strong U-shaped recovery with July sales back just 4% year on year. While the recovery in sales is welcome, the serious challenge of rebuilding profits margins in this business remains.

Commitment

Talbot says she remains confident the business will deliver double-digit profit margins in the second half of 2020 and underlined her commitment to hauling Glanbia’s performance nutrition business back to the lofty heights of 12% to 13% profit margins by 2022.

If this can be achieved and Talbot can rebuild the muscle on Glanbia’s performance nutrition business, it will be an incredibly impressive turnaround.