Shares in Glanbia slumped 9% on Thursday after the company announced third quarter results showing continued weakness in its performance nutrition business.

Glanbia shares opened trading on Thursday morning at €11 but quickly plunged to lows of €9.56 as markets digested the third quarter results. The group’s share price recovered slightly to close out trading on Thursday at just over €10, which is down 9% for the day’s trading.

Third quarter

Glanbia reported increased revenues of 16.9% across its entire business for the third quarter of its 2019 financial year.

This was driven by an 11.3% increase from the acquisition of SlimFast and Watson in the past year. Overall volumes increased 2.4% while prices were up 3.2%.

The group reported strong performance in its ingredients business (nutritional solutions) with revenues up 25%. However, there was continued weakness in its performance nutrition business. Despite revenues up by 16.5%, prices declined by 1.4% and volumes fell by 7.9%. The SlimFast acquisition added 25.8% to revenues.

The near 8% decline in sales volumes in its performance nutrition arm is worrying for Glanbia. Once the jewel in the crown of Glanbia’s rapid growth story, performance nutrition is now acting as a drag on the group’s overall performance.

Price increase

The group said that it had implemented a price increase during quarter three, as it stated it would do at the half-year results.

The statement said that like-for-like volumes in the performance nutrition business were weaker than expected in the third quarter. It highlighted key non-US markets in Brazil, Middle East and India as “remaining challenging”.

It said that these issues are likely to continue into 2020.

Glanbia expects declines of mid to high single-digit revenue declines (on a like-for-like basis) in performance nutrition for the full year.

However, it expects the acquisition of SlimFast to counter these declines and overall to deliver a good revenue growth. The SlimFast acquisition is expected to have a very strong year, according to the statement.

Disappointed

Group managing director Siobhán Talbot said she was “disappointed” with like-for-like volume performance in the performance nutrition business. She added that the group was “actively addressing the issues in these markets as they represent a compelling long-term growth opportunity”.

The group reiterated its full year guidance of adjusted earnings per share on a reported basis being in a range of 88c to 92c.