Glanbia looks ahead to bigger ingredients business
completed restructuring of the group and is ready to reap greater
profits from its ingredients, reports Dominique Patton.
New capacity in the US helped Glanbia increase its ingredient sales by 18.6 per cent over 2004 to more than €1 billion for the first time, while operating profits at the division that makes whey proteins and cheese ingredients were up 33 per cent.
"The main driver was the US, based on capacity expansion in cheese, and good volume and market pricing," said John Moloney the group's managing director.
The ingredients business accounted for 58 per cent of the group's €1.85 billion turnover during the year, compared to 44 per cent the prior year.
This was also a result of the poor performance of the pigmeat business, which dragged down sales and profits at the consumer foods unit, and the sale of its UK milk operations during 2004 as part of restructuring.
Investments in further ingredients capacity will continue to grow this business however. Recent capacity expansion has made it the biggest whey proteins producer in the US, with a 35 per cent share of the market, Moloney told NutraIngredients.com.
Glanbia has also begun building a $190 million cheese and whey manufacturing facility in New Mexico as part of a joint venture, that will significantly ramp up the cheese business.
"That development will be very significant," said Moloney.
The Nutritionals unit, recently enlarged with the acquisition of Germany's premix business Kortus, is also targeted for growth.
"We are already selling a lot of our protein ingredients to customers also buying premixes so this acquisition [Kortus] adds to our capability to offer whole solutions," said Moloney.
Further acquisitions will grow this unit further, as well as new products, some of which will be developed in a new R&D centre in Ireland, already responsible for the firm's fat reduction ingredient ProLibra.
Currently whey proteins account for around 25 per cent of the firm's $600 million turnover in the US. High-end proteins used in nutritional products like isolates, lactoferrin and milk minerals account for around a quarter of these protein sales.
"It is the impact [of Nutritionals] on margins that we're particularly interested in," said Moloney. "We want to double the size of this business in the next two years."
The firm could spend between €40 million and €100 million on further acquisitions.
