CAP reform hits profits at Glanbia

IRISH DAIRY and meat group Glanbia has reported heavy weather in its farm inputs business in the first six months of the year.

Operating profit fell €3.1m (£2.1m) to less than €36m (£24m), with the group blaming farmers’ weaker wallets after CAP reform and tough domestic trading conditions.

The slimmer margin comes despite an increase in sales, which rose €45m to €926m (£633m).

John Moloney, group managing director, said he expected full-year results to show no growth compared with 2004, but promised an upturn in 2006.

“The trading environment in Ireland is expected to remain challenging for the remainder of this year.

“We have taken strong proactive measures on costs, productivity and market positioning and the benefits of these initiatives will flow through during the next year.”

Glanbia’s agribusiness division, which makes animal feed and sells farm inputs saw static sales and declining profits over the period.

But the consumer foods business bore the brunt of the slippage, with profit down 20% to €8.5m (£5.8m).

Manufacturing at the group’s yoghurt plant in Inch is being restructured, costing €5m, with further costs attached to the closure of two Dublin milk depots.

An analyst with Investec Securities told Farmers Weekly that cashflow problems because of the delayed single farm payment had had a big impact on input suppliers like Glanbia.

The group’s milk, cheese and whey protein ingredients business saw sales increase, especially in the US.