Glanbia’s major boost for Kilkenny

GLANBIA Plc provided the city, county and region with a major boost on Wednesday of last week when it announced that the positive underlying trends in global dairy and food nutritional businesses experienced in 2010 have continued in 2011. The group is performing extremely well this year to date and expects to deliver a strong first half result. In real terns it means that farmers will continue to do well and buoy the local economy with their buying power. With dairy prices and the price paid for cattle expected to remain strong, the medium to long term outlook is really good and is one of the few growth areas in the country.

GLANBIA Plc provided the city, county and region with a major boost on Wednesday of last week when it announced that the positive underlying trends in global dairy and food nutritional businesses experienced in 2010 have continued in 2011. The group is performing extremely well this year to date and expects to deliver a strong first half result. In real terns it means that farmers will continue to do well and buoy the local economy with their buying power. With dairy prices and the price paid for cattle expected to remain strong, the medium to long term outlook is really good and is one of the few growth areas in the country.

At the AGM of the giant-food nutritionals company at Lyrath Estate Hotel speaker after speaker praised the management for their work they are doing. It’s a far cry from five years ago when the same management were criticised for the way the company was being run, Nothing has changed in the meantime, the management are still in place and running the company as before but prices have picked up and the overall long tern strategy put in place by managing director, John Moloney and the rest of the team is paying off.

And all plans by the farmer owned co-op that owns over 50% of the company to buy the Irish operations from the Plc have been put aside for at least five to ten years until such time as prices slide, as they inevitably will at some stage. Farmers realise they should hitch their wagon to Mr Moloney and his team it makes good economic and strategic sense..

Glanbia is now one of the top ten rated companies on the Irish stock exchange. It is the largest manufacturer of mozzarella cheese in the US and has underpinned its long term future with key joint ventures which are proving hugely successful. Thanks to John Moloney and his team they have cornered the market in the US for nutritional drinks and bars and this is a growing market which Glanbia continues to exploit. It’s hard to imagine that a company based in the city and with its major manufacturing and processing factory in Ballyragget has become such a global player in world dairy and food markets.

In terms of prestige for the city and county, it means a lot and will be a major catalyst for enticing foreign investment into Kilkenny. It is all good news for the local economy.

Glanbia’s key areas of growth, the US market and the Irish dairy market are expected to perform even better in 2011 than they did in 2010. That means that farmers and others in the community who have shares in the Plc can expect an even bigger dividend of 10 cents per share next year. Interesting to note that 72% of the company’s profits are now generated outside of Ireland which means that it is not as badly hit as others due to the recession here although it is still experiencing difficulties with the large supermarkets and trying to compete with cheaper milk from Northern Ireland.

The news gets better. Kilkenny farmers will have the opportunity to grow their milk businesses once the quota restrictions put in place by the EU nearly 30 years ago are done away with in 2014.

Mr Moloney forecasted their would be a 15% increase milk production in the first year of the abolition of quotas and a 5% compound increase for a number of years following that.

While it might not mean a huge number of extra jobs on Kilkenny farms what it does do is underpin the existing jobs and leaves potential for expansion and no other industry in Ireland is doing that at present

Any increase in milk production will mean a huge change at the Ballyragget processing plant and long term strategies for this are being worked out at present but it would seem rational that Ballyragget would be the place to expand processing.

A detailed survey of Glanbia suppliers in Ireland on their plans was completed recently with over 70% responding to it. Mr Moloney said there was a need for a close alignment between processors and suppliers and an evolution of a structure was also needed. He said Glanbia will have concrete plans prepared sometime in the first half of next year. “It is too early to speculate on any investment but overall in will be positive,” he said.

He pointed out that a mind change was needed because farmers and processors had spent the last 25 years thinking abort rationalisation and adding value rather than driving overall through put. “So it changes the game quite significantly,” he added.

And as an side, all this news means that the owners of Kilmogar House and its 292 acres off the Dublin Road and only six miles from the city can expect a good price when it goes under the hammer on July 1 at Cillin hill and sold by Kilkenny Mart Properties.

It wasn’t too long ago that the company hit the E1 billion in turnover and that generated good headlines. That is now up to to E2.2 billion not including the E400 million of turnover from joint ventures in the US, Nigerias and other parts of the world. It won’t be long before the E3 billiion mark will be broken but that is not a priority at the moment.