Stock market investors have reacted very badly to Glanbia’s financial results for the first six months of the year, with the company’s shares closing at €16.45, a drop of more than 9.5% from the day’s opening trade at €18.18.

While the numbers reported were generally in line with what analysts expected and Glanbia increased its interim dividend and started a fresh €50m share buyback programme, the company’s guidance for the rest of the year was clearly below what was hoped for.

While the guidance for full-year adjusted earnings per share growth was maintained at between 5% and 8%, there was a reduction in the forecast for revenue growth at the key Glanbia performance nutrition division.

When the company reported full-year earnings for 2023, it put revenue growth in that division for 2024 at between 4% and 7%. Today, it cut that guidance for revenue growth to between 2% and 5%.

SlimFast problem

There is also clearly a problem for the company with the SlimFast brand, which has again performed very poorly.

In the first six months of this year, the 'other brands portfolio', where SlimFast now lives on Glanbia’s books, saw like-for-like revenue growth at -24.5%.

Overall, the performance nutrition division saw revenue slip slightly to $882.1m (€800m), with the growth of the Optimum Nutrition brand almost making up for the weak performance in other areas.

This report also saw significant changes to how the company reports revenue, with the adjustment meaning that the company has lower revenues than was reported in previous results.

While the change - where it no longer reports total revenues from US joint ventures in its accounts, but rather only reports its share of the revenues - is purely an accounting change and has no direct impact on earnings, it does mean that headline revenue for the first six months of the year was $934m (€847m) lower than the number reported for the same period last year.

CEO Hugh McGuire told the Irish Farmers Journal that the company had faced stiffer competition in key markets for whey products, but that those prices were starting to recover.

It seems fairly clear that the stock market needs some convincing that those price projections are correct before investors are ready to back the company again.