Glanbia has recorded a strong start to its 2020 financial year despite the challenges posed by the COVID-19 pandemic. Announcing a first-quarter trading update on Wednesday for the first three months of this year, Glanbia said its revenues for the period were up 17% year on year.

This was driven by sales volume growth of more than 6% and sales price increases of 9%, while the Watson acquisition from 2019 added 1.5% to the group’s performance.

Glanbia said its business performed well in the first quarter of the year due to strong consumer demand for its nutrition products and ingredients, which are predominantly sold in retail channels.

However, the company did note that consumer demand became more volatile at the end of March and early April due to the impact the COVID-19 virus was having on shopping activity.

As a result of the current economic uncertainty as well as the difficulty in assessing the full impact and duration of the virus, Glanbia said it was withdrawing its previous forecast for profitability for its 2020 financial year.

Financial position

The current lockdown in Europe and the US, as well as the economic recession caused by the virus, are going to put major strains on company balance sheets in 2020. In its announcement on Wednesday, Glanbia said it is in a strong financial position to meet this challenge.

The company said its net debt had been reduced to €690m at the end of the quarter thanks to strong cashflow, while it also has banking facilities of €1.15bn available should it need them.

In order to ease further pressure on cashflow, Glanbia said it had cut discretionary spending and increased its monitoring of working capital.

Capital expenditure has also been reduced to key strategic projects and essential maintenance only, while any potential acquisitions have been deferred.

Consumer demand

Glanbia group managing director Siobhan Talbot said it had been a good start to the year for her company but admitted consumer demand was already changing rapidly due to the virus.

“Overall demand in our key end markets was positive in the first quarter, however greater volatility in consumer shopping behaviour was evident in recent weeks arising from COVID-19 and due to uncertainty of duration and impact of this pandemic, full-year 2020 financial guidance is withdrawn,” she said.

The COVID-19 pandemic is a human tragedy and our priorities are to protect our people, provide essential food supplies and maintain our strong financial position

Talbot said the food industry has a critical role to play in meeting the COVID-19 challenge and thanked all the frontline staff at Glanbia for their efforts in keeping processing sites open throughout the crisis to date.

“The COVID-19 pandemic is a human tragedy and our priorities are to protect our people, provide essential food supplies and maintain our strong financial position. Our nutritious products and ingredients are essential for our consumers and to date all of our plants have largely operated to plan and maintained supply,” said Talbot.

“I would like to express my deep thanks to our employees, customers and suppliers around the world, in particular to our frontline staff and their families who continue to give enormous commitment to keep our supply chain and operations running,” she added.