Profits (EBITA) at Glanbia PLC fell 7.3% to €123.7m for the first six months of 2018. Revenue for the period increased 3.6% to €1.1bn for the period on a constant currency basis driven by volume growth of 5.7%.

The weaker profit was driven by the group’s performance nutrition business where profits (EBITA) fell 16.4% to €63.3m. Profits (EBITA) were up 4.5% to €60.4m. Profit margins fell from 15.4% to 12.2% in the performance nutrition business. Margins increased in the ingredients business from 10% to 10.2%.

The company blamed the margin decrease in performance nutrition on the competitive nature of the US market, brand investment and increased freight costs. However, it expects this margin decline to be reversed in the second half of the year as lower whey input costs materialise.

Revenues in the performance nutrition business increased 4.9% to €519.6m, which was driven by a 5.4% volume growth, offsetting a 4.1% fall in prices. Branded volumes grew 5% in the period with the majority of this growth in non-US markets. The group said that the US market remained competitive.

Ingredients

The ingredients business, Glanbia Nutritionals, reported an 2.4% increase in revenue to €592.4m and this was driven by a volume increase of 5.9% offset by a price decline of 3.5%. Volume growth was driven by both nutritional solutions and US cheese. The price decrease was primarily driven by a reduction in dairy market prices. Profits increased 4.5% to €60.4m as a result of revenue growth and improved margins.

Its share of the profits in its joint ventures (JVs), including its Irish operations (Glanbia Ireland), increased 4.7% to €625m in the period driven by a 7.3% increase in volume offset by a 2.6% reduction in price. The lower pricing reflects lower year-on-year global dairy markets, which affected margins seeing profits (EBITA) down 25.6%.

As a result, Glanbia’s share of JVs profit after tax (PAT) from continuing operations, pre-exceptional, decreased by €8.2m to €17.8m in the first half of 2018.

Siobhán Talbot, group managing director, said: “Glanbia delivered in line with expectations in the first half of 2018 and reiterates guidance for 2018 full-year earnings growth.” She added that the group expects margins for the full year to be similar to 2017. She said the group prioritised investment in its brands and operational infrastructure in the first half in advance of input cost reductions. which are materialising as expected in the second half of the year.