Glanbia reports “unexpected” growth while BioGaia reveals pandemic impact in latest financial results

12 Aug 2021 --- Glanbia and BioGaia have each released their financial results for the first half of 2021. While factors relating to the COVID-19 pandemic decreased BioGaia’s profits, easing lockdowns had a positive impact for Glanbia.

The Ireland-based company’s performance exceeded expectations, with Glanbia noting that the market reopenings in the first half of 2021 “strengthened its belief” that long-term growth will be delivered in the future.

COVID-19 stockpiling takes a toll on BioGaia
In the first half of the year, BioGaia had SEK 405.1 million (US$46.6 million) net sales, a decrease of 5 percent (excluding foreign exchange effects).

Operating profit for H1 2021 decreased by 15 percent to SEK 113.5 million (US$13.1 million), while Q2 profit after tax fell by 31 percent to SEK 54.7 million (US$6.3 million).

The second quarter of 2021 also saw net sales amount to SEK 203.1 million (US$23.4 million), a decrease of 17 percent (excluding foreign exchange effects).

The change in sales was affected by higher comparative figures since the corresponding period last year was positively impacted by COVID-19 related inventory build-up at their customers.

“Currently and for over a year now, the COVID-19 situation continues to impact our sales and earnings. During the first and especially the second quarter of last year, many of our distributors built up inventories to avoid being affected by the anticipated delivery difficulties connected to the COVID-19 crisis,” Isabelle Ducellier, CEO at BioGaia.

“This has resulted in greater fluctuations than normal in our sales as well as between our regions. Furthermore, the still relatively strong Swedish krona has also affected our earnings.”Glanbia exceeded financial expectations with a solid first half this year.

Critical events may have impacted profit
Key events that occurred in the second quarter of 2021 were BioGaia’s agreement with Minapharm Pharmaceuticals for exclusive rights to sell BioGaia Protectis drops in Egypt.

In this second quarter net sales amounted to a profit of SEK 203.1 million (US$23.3 million). In the first half of the year the company experienced net sales that amounted to SEK 405.1 million (US$46.6 million).

Also, the company announced in May that BioGaia’s products would be sold under the BioGaia brand in Finland.

In the second quarter of 2020, BioGaia achieved sales of SEK 245 million (US$28.2 million). However, the second quarter of 2021 saw a 17 percent decrease “despite the fact that the first quarter this year was relatively strong with orders from China that were delivered in the final days of March instead of in the second quarter,” adds Ducellier.

Glanbia exceeds financial expectations
Glanbia delivered a “strong” first half of 2021, ahead of expectations. This was due to revenue growth and margin improvements that delivered adjusted earnings per share growth of 85 percent.

Overall, total group profit for H1 2021 was €133.5 million (US$156.6 million), up €63.6 million (US$74.6 million) from the prior half year.

Additionally, Glanbia also delivered strong cash conversion in the period, which has funded capital allocation toward its LevIUp acquisition, increased dividend and a further share buyback program. Full-year guidance is for adjusted EPS growth of 17 percent to 22 percent versus the prior year.The COVID-19 pandemic decreased BioGaia’s profits.

Notably, wholly-owned revenues rose by 20.3 percent from H2 2020 to €2.0 billion (US$2.4 billion).

“We made strong progress on our strategic agenda in the first half with significant progress on the Glanbia Performance Nutrition (GPN) transformation program driving revenue and margin growth, the acquisition of a 60 percent stake in LevlUp, a European gaming nutrition brand, and the commissioning of a US$470 million JV plant in Michigan,” says Siobhán Talbot, Glanbia group managing director.

Financial growth
The 20.3 percent growth in the first six months of 2021 was due to the high demand across the GPN branded business relative to the pandemic-related challenges in 2020.

Also, the Nutritional Solutions (NS) ingredients business built on a very resilient 2020 performance. This performance drove a significant improvement in profit with adjusted earnings per share (EPS) of 52.86 cents in the period.

The company also announced a €50 million (US$58.7 million) share buyback scheme. “As a result of this strong performance, we plan to increase returns to shareholders by raising our interim dividend by 10 percent as well as launching a share buyback program today of up to €50 million (US$58.7 million),” adds Talbot.

By Nicole Kerr