Shares in global nutrition giant Glanbia tumbled by more than 20% today after the company warned of an expected earnings decline of up to 11% in 2025. The drop comes as Glanbia faces prolonged cost pressures from rising whey prices, a key ingredient in its performance nutrition products.
Profit Forecast and Rising Costs
The company reported a 6.8% rise in full-year adjusted earnings per share (EPS) for 2024, reaching 140.03 cents. However, Glanbia now expects EPS to fall to between 124 and 130 cents this year due to a $200 million increase in production costs. This surge is set to cut profit margins in its performance nutrition division from 16.9% in 2024 to between 13-14% in 2025.
Previously, Glanbia anticipated whey prices to decline in the latter half of 2025. However, peak prices are now expected to persist into the second half of the year before easing in late 2025 or early 2026.
Chief Financial Officer Mark Garvey highlighted the severity of the cost surge, stating that peak whey costs in 2025 will be 20% higher than those seen post-COVID.
SlimFast Sale and Portfolio Optimization
As part of its broader cost-saving strategy, Glanbia announced it will sell its struggling U.S. weight management brand, SlimFast. The company took a $91.4 million non-cash impairment charge on SlimFast’s underperformance, acknowledging the brand’s struggles amid shifting consumer trends and the rise of weight-loss medications.
Acquired for $350 million in 2018, SlimFast once accounted for 7% of Glanbia’s performance nutrition division. However, sales have plummeted since 2022 as consumers moved away from low-carbohydrate diets.
The sale is part of Glanbia’s transformation plan, which aims to achieve at least $50 million in annual cost savings by 2027. The company is also restructuring into three divisions: Performance Nutrition (PN), Health & Nutrition (H&N), and Dairy Nutrition (DN).
Financial Performance and Shareholder Returns
Despite the challenges, Glanbia reported a 5.8% increase in group revenue for 2024, reaching $3.839 billion, up from $3.640 billion the previous year. Pre-exceptional profit after tax rose by 4.1% to $310.3 million.
The company is maintaining strong shareholder returns, increasing its total dividend for 2024 by 10% to 38.97 cents per share. It also approved an additional €100 million share buyback program, following €102 million returned to shareholders last year.
CEO’s Outlook on Growth and Challenges
Chief Executive Hugh McGuire emphasized the company’s resilience, highlighting strong growth in its Optimum Nutrition and Isopure protein brands. He reaffirmed Glanbia’s commitment to evolving its portfolio, citing the recent acquisition of Flavor Producers and the decision to exit both the Body & Fit and SlimFast businesses.
“Looking ahead to 2025, we will focus on continuing to drive performance across our portfolio while navigating short-term input cost inflation,” McGuire said.
Leadership Changes and Market Reaction
Meanwhile, Glanbia’s Chairman Donard Gaynor announced plans to retire from the board following the company’s 2026 annual general meeting.
Following today’s announcements, Glanbia shares saw a sharp decline in Dublin trading, reflecting investor concerns over cost pressures and the company’s strategic direction.