Glanbia issued full year results this morning with earnings (basic adjusted) of 30.7c which were within the guided range of 30-31c and in line with our 30.5c. On a divisional basis US & Nutritionals was slightly back on our revenue expectations but higher than expected margins acheived 1.6% out-performance at the operating profit level. The JVs and Associates contribution of €10.23m was considerably ahead of our forecasts for €8.3m, with strong performance from SW Cheese and Nigeria turning profitable contribuing to stong margin gains for the JVs. Dairy Ireland was 8% lower at the operating profit level than our already deflated expectation, with €24m reported.

Net debt at year end was €442.6m, ahead of our expectations of €473m. Some comforting words in the outlook statement on sales trends – “whilst the outlook remains challenging, we are seeing some positive signs in our operating environment which should underpin our performance in 2010”.

The results are overshadowed by the announcement that the company is in discussions regarding the disposal of its Dairy Ireland operations to the Glanbia co-op. This would involve the disposal of Irish Ingredients, Consumer Foods and agribusiness ops and related Irish JVs and associates. No consideration details are provided in the statement, but it is implied that the co-op will pay for the operations through the shares it holds in Glanbia (in whole or in part). Caveated with the fact that there have been no details provided on the deal, we see this as a considerable positive for the plc shareholders, with the exit of low margin cyclical businesses allowing a focus on the solid overseas investments the Group has made over the years. The details will be important with debt and pension arrangements being as important as consideration.

The company will host a conference call at 9.15am dail in: Ireland 01 2421074; UK 0208 974 7940; Europe +44 208 974 7940; US 718 354 1175. Access code 606 253.

We have a HOLD on Glanbia.