January 18, 2008

Ireland's Glanbia shelves meat business, shifts focus on dairy products

Glanbia, Ireland's largest dairy product company, announced to complete its sale of its remaining meat interests to a management-led consortium.

The company will no longer be involved in what it considers low margin business such as pig slaughtering, and would focus on areas such as cheese, nutritional ingredients and consumer foods with a nutritional emphasis.

Analysts were not surprised with the move and in fact thought it was inevitable. It is a low margin business and the sale will not have a significant impact on the group, one analyst said last night. He added that the price is likely to be in the low single digits, well under EUR10 million (US$15 million).

Even if it did make €10m, this would still be only a fraction of the huge sum written off by Glanbia during the turbulent period between 2000 and 2004.

Glanbia is the leading pork slaughterer and processor in Ireland, producing 1.2 million animals, or 48.7 percent of the national supply last year.

The company also operates the only pork- head boning facility in Ireland at Clara, Co Offaly, and a bacon curing and processing facility at Jamestown in Co Leitrim.

In 2001, the company took a modest net exceptional charge of EUR5.53 million (US$8 million). However, when worsening trading conditions prompted the sale of its UK consumer meat division a year later, the loss on the sale came to EUR65 million (US$95 million).