After a difficult first half to 2020, Glanbia posted a robust set of third quarter results on Thursday morning that point towards a decent recovery in its core performance nutrition business.

For the three month period to 3 October, Glanbia said like-for-like sales were up 3.1% year on year thanks to sales price increases of 4.8% more than offsetting a 1.7% dip in sales volumes.

Thanks to strong operating cashflow in the period, Glanbia was able to reduce its net debt by €188m to just over €628m, leaving the group with a net debt to earnings ratio of 1.95 times.

Performance Nutrition

Crucially for Glanbia, the company said there was a decent recovery in both sales and profit margins in its performance nutrition business in the third quarter.

Like-for-like sales of branded performance nutrition were down 2.3% in the third quarter, which is a big improvement on the 12% decline in sales earlier this year.

The company also said earnings margins in the division are now back in double-digit territory having fallen to just 3.7% in the first half of the year.

Nutritionals

Glanbia’s nutritionals division continues to return a strong performance in 2020. Third quarter sales were up 11% year on year thanks to higher prices, particularly for cheese. US cheese prices hit record highs during summer 2020.

Share buyback programme

The improvement in sales and profit margins in the third quarter, coupled with strong operating cashflow, has prompted Glanbia to announce a €50m share buyback programme.

Glanbia said its intention is to buy shares on the open market and cancel them. It will commence the share buyback scheme in November this year.

Outlook

Having withdrawn its earnings guidance earlier in the year, Glanbia did not give an updated forecast for its 2020 earnings.

Commenting on the third quarter results, Glanbia group managing director Siobhán Talbot said the company had shown its resilience through the challenges posed by COVID-19.

“Glanbia has continued to focus on improving its financial position while maintaining investment in growth. Operating cashflow has been strong and net debt versus the same period in the prior year has reduced by €188 million. We expect to continue to build momentum into Q4 and to exit the year well positioned for 2021 growth,” said Talbot.