February 26, 2020 / 8:39 AM / 3 months ago

Glanbia takes steps to boost struggling sports nutrition products

DUBLIN, Feb 26 (Reuters) - Irish nutrition group Glanbia outlined steps to simplify and improve the performance of its division that sells products aimed at athletes and body builders as full year earnings fell in line with company guidance.

Glanbia cut its earnings guidance for 2019 in July after performance nutrition sales volumes were weaker than expected because it faced currency and tariff headwinds in major non-U.S. markets, including Brazil, the Middle East and India. A shift to online sales in Europe also had an impact.

Measures to improve the Glanbia Performance Nutrition (GPN) included exiting low margin areas including the majority of U.S. contract manufacture business, managing the division as four distinct businesses and optimising routes to market.

The North America-focussed group also undertook a major rationalistion of its inventory, cutting around 35% of its portfolio, Glanbia finance director Mark Garvey told Reuters in a telephone interview on Wednesday.

GPN, which includes the SlimFast brand acquired in 2018, accounted for around one third of wholly-owned group revenue last year and Glanbia expects the division to regain revenue growth momentum in 2020.

Despite wholly-owned revenues growing 16.6% year-on-year on a constant currency basis in 2019, adjusted earnings per share (EPS) fell 7.7% to 88.10 euro cents, just about in line with the revised July guidance for between 88 and 92 cents.

Glanbia said it expected 2020 adjusted EPS to be broadly in line with the prior year on a constant currency basis.

Shares in the group, down 29% since the profit warning six months ago, were 2.3% lower at 10.24 euros at 0815 GMT.

Analysts at Davy Stockbrokers wrote in a note that while it would cut its forecast for 2020 EPS by 3 to 4%, the breadth of measures being taken to restore momentum in the GPN division appeared credible. (Reporting by Padraic Halpin; editing by Emelia Sithole-Matarise)

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