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Glanbia Sees Results at Upper End of Forecasts

Irish food group Glanbia said on Tuesday it expected full-year results would be towards the upper end of analysts' expectations following a strong first half.

In a trading update ahead of first-half results due on Aug. 29, Glanbia said it expected earnings growth of around 20 percent in the six months to June 30 after a flat first-half performance last year.

Glanbia said the spread of its business, which includes operations in Britain, the United States and Nigeria, combined with "positive trends in world dairy markets" had contributed to first-half earnings growth.

"Glanbia expects the group's full-year performance (will be) in line with the upper end of market expectations, despite a cautious outlook for international joint ventures for the second half," the company added.

The group said its main food ingredients division had, as expected, delivered a strong performance after an improvement in Ireland and the first contribution from the California-based nutrients maker Seltzer Companies that it bought in 2006.

"Conversely, the dramatic increases in raw material prices as a result of strong global dairy markets led to short term trading pressures in the group's key international joint ventures in the U.K., USA and Nigeria," the company said.

Glanbia said a time lag in passing those additional costs on to customers would mean "disappointing first half performances" at those operations. "For the full year, there are some short term factors in our international joint ventures that cause us to be a bit cautious at this time," said Group Managing Director John Moloney.

"However, we expect to deliver strongly in terms of profits, margins and earnings and we are confident that the group is well on target to deliver strong double digit growth for 2007 as a whole," he added.

Goodbody analyst Liam Igoe said the company appeared to have stopped just short of raising its full-year outlook while it waits to see how well it can offset higher costs with increased prices for its products.

"We believe there is a good possibility that the full-year result will be higher than the 14 percent suggested, due to continued international dairy market buoyancy and strong fundamentals within Glanbia itself," he said.

Shares in Glanbia, which have gained almost 12 percent so far this month, were down 1.5 percent at 3.96 euros in line with a weaker Irish market.