Glanbia shares may rally if 2019 results don’t shock, Barclays says

Glanbia shares, which slumped almost 40 per cent last year amid concerns over its division that supplies protein products for gym-goers and dieters, may rally if the company manages to meet market expectations with its full-year figures later this month, according to analyst at Barclays.

The Kilkenny-based group shocked investors last July when it revealed that its key Glanbia performance nutrition (GPN) unit recorded a 30 per cent earnings drop in the first half.

It said at the time that geopolitical tension and supply chain issues hit sales in the Middle East; weaker economic conditions affected Latin American markets; supply chain tweaks in India in response to tariff there had taken longer than planned, while European consumers were moving at pace to buying online.

“We think the derating [of Glanbia’s stock] was justified,” said Barclays analysts, including Arthur Reeves in a note to clients ahead of the company’s results on February 26th. “However, If Glanbia can deliver 2019 results in line with guidance and convince investors that it has fixed some specific issues in GPN, then we see an opportunity for a share price recovery.”

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Sports nutrition

While Glanbia is the leader of global sports nutrition, a market that has grown at a compound annual rate of 12 per cent over the past three years, the industry has become increasingly competitive with low barriers to entry, according to Barclays.

The analysts said that the first sign of problems came when Glanbia reported first-quarter results last year, which showed that its business volumes, excluding those acquired through deals, declined by 16.5 per cent.

Glanbia, led by chief executive Siobhán Talbot, has forecast that its 2019 earnings per share will come to between 88c and 98c.

However, Barclays said that a slight dip in the value of the euro against the dollar since Glanbia issued a trading statement at the end of October may shave 1c off the company’s earnings per share.