Glanbia yesterday vowed to “aggressively address” its ailing dairy ingredients business after the division swung into a “very significant” loss in the first half of the year.
The fighting talk came as the food giant, which part-owns a cheese factory in Magheralin, Co Armagh, revealed a 28% fall in pretax profits for the first half of the year, sending shares into a downward spiral that saw them close 3.7% in the red.
The result was largely influenced by the performance of the dairy ingredients division, though revenue and profits from joint ventures were also down. The dairy ingredients business processes milk into a range of ingredients which are sold to the export market.
Glanbia boss John Moloney said: “The [dairy ingredients] business is at a level that can not be sustained.
“We'll be aggressively addressing that.”
Glanbia doesn't strip out figures for its dairy ingredients operations, but NCB analysts estimate the division lost about €16m in the half year.
Figures from Glanbia show the ‘Dairy Ireland' business, which dairy ingredients slots into, suffered a 77% collapse in operating profits during the period. The business accounts for 57% of Glanbia's €945m turnover and contributed just €6.3m to the company's bottom line.
Mr Moloney said the group would need to pay “a cent or so” less for milk to get the dairy ingredients business to break even in its current form, but he ruled out any imminent decrease since the company is “cognisant that these are exceptional times” for farmers.