Milk bottles

Lower milk prices helped drive down food inflation in July

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A sharp slowdown in soaring food and drink prices helped drive inflation down to a 17-month low in July, according to the new government data this morning.

However, prices of food and non-alcoholic beverages still rose by 0.1% between June and July, compared with a rise of 2.3% in the same two months a year ago.

It helped ease the annual rate of inflation in the category to 14.8% last month, down from 17.3% in the year to June, the Office for National Statistics reported.

The easing was widespread, with 10 of the 11 classes measured seeing inflation fall, while three of those ten also registered a fall in monthly prices between June and July, including milk, cheese and eggs.

The price of whole milk fell 5.8% on the month, while low-fat milk was down 3.2%.

The second largest downward contribution came from the bread and cereals category, where the annual rate eased to 14.4% from 16.7% in June. Within this category, bread, crumpets, pizzas and breakfast cereals made the largest negative contributions.

Fish was the only category not to contribute to a slowing of inflation, remaining the same month on month, with canned tuna prices nudging higher and being offset by a dip in frozen fish fingers.

Alcoholic drinks and tobacco also continued to see higher prices, with annual inflation increasing from 9.2% in June to 9.4% in July.

The ONS figures follow Kantar yesterday reporting grocery inflation of 12.7% in the four weeks to 6 August.

The slowdown in food and drink prices contributed to an easing in the UK headline rate of inflation, which fell to 6.8% in July, down from 7.9% in June.

However, this was largely down to falling energy prices as gas and electricity bills were substantially lower than a year ago.

While the headline rate declined, core inflation - stripping out energy and food prices, still recorded a annual rise of 6.9%.

Matthew Corder, ONS deputy director of prices, said: “Inflation slowed markedly for the second consecutive month, driven by falls in the price of gas and electricity as the reduction in the energy price cap came into effect.

“Although remaining high, food price inflation has also eased again, particularly for milk, bread and cereal.

“Core inflation was unchanged in July, with the falling cost of goods offset by higher service prices.”

Morning update

Glanbia announces new boss and reports first-half results

Glanbia has appointed a new CEO after Siobhán Talbot retired from the Irish ingredients and nutrition group after ten years as managing director.

Talbot will step down from her position and the board on 31 December, retiring from the group in January 2024.

Hugh McGuire, currently CEO of Glanbia Performance Nutrition, will be appointed CEO of group and join the board as an executive director on 1 January 2024.

McGuire joined Glanbia in 2003 and held a range of senior leadership roles across the group, residing in the US for nine years. He initially worked in the ingredients division culminating in his role as CEO of Glanbia Customised Solutions where he led the development of the global vitamin and mineral premix business through a number of organic development and M&A projects in the US, Europe and Asia.

In 2008 he was appointed CEO of Glanbia’s Performance Nutrition business. During his tenure, GPN has grown organically and through M&A from annual revenues of $185m to $1.7bn (£1.3bn) in 2022 and has become the world’s number one sports nutrition business.

Prior to joining Glanbia, McGuire worked for McKinsey & Company as a consultant across a range of industry sectors and prior to this in marketing and commercial roles with Nestle and Leaf.

Chairman Donard Gaynor said the appointment was the conclusion of an extensive selection process.

“Hugh has led the growth and evolution of GPN with unrelenting focus to become a global leader and a key earnings generator,” he added. “He combines a passion for our business and our served markets with entrepreneurial flair and a growth mind-set.

“I have known Hugh since I have joined the board and I know he is committed to Glanbia’s success and is the ideal leader to take us through to the next phase of our growth and evolution.”

McGuire said: “Siobhán leaves Glanbia in a very strong position for future growth and I’d like to sincerely thank her for all her support over the years.

“My focus will be to build upon these strong foundations for the benefit of all stakeholders in the years to come.

“Glanbia has great nutritional ingredients, brands and businesses, serving exciting categories in health and wellness that truly support our consumers and customers to reach their nutritional goals.

“In addition we have really talented people and a strong values led culture. I look forward to working with my colleagues globally to capture the growth opportunities ahead, to sustainably create shareholder value and achieve our full potential as a better nutrition business.”

Talbot joined the Glanbia in 1992 and held a number of senior positions, including group finance director, prior to her appointment as group managing director in 2013.

Under her leadership the group’s business model has been reshaped towards growing and higher margin consumer branded and ingredient nutrition markets worldwide.

Gaynor said: “On behalf of the board I would like to express our deep gratitude to Siobhán for her leadership and contribution to Glanbia over the past ten years as group managing director. A deeply principled and values driven leader, Siobhán has provided outstanding strategic direction to Glanbia, reshaping the business and its culture to become a clear leader in the world of better nutrition.

“She led the creation of a focused business which is aligned to growing consumer trends with clear purpose and values, a strong balance sheet and continued ambition for growth which are all key parts of her distinguished legacy.”

Talbot added: “It has been my great privilege to lead Glanbia over the past ten years. I am very proud of how the organisation has evolved, grown and strengthened over this period.

“It is well positioned for the next phase of growth with great people, culture and capabilities. I want to thank my leadership team and all my colleagues right across the group for their hard work and commitment to Glanbia and their personal friendship.

“I would like to wish Hugh well as he takes the helm in 2024 and I look forward to working with him on the leadership transition over the coming months. I know how passionate and committed to Glanbia he is and I have no doubt he will drive the group forward in pursuit of its strategic focus on better nutrition.”

The move comes as Glanbia reported first-half results ahead of expectations, leading to a full-year earnings upgrade.

Group revenues fell 10.3% to $2.8bn (£2.2bn) in the six months to 30 June, but underlying profits increased 6.1% to $198.6m (£155.9m).

The performance nutrition division increases like-for-like branded revenues by 3.7% as a result of jacking up prices by 10.9%, leading to a 7.2% drop in volumes.

The nutritional solutions arm of the group reported like-for-like revenues down 15.2% as prices dropped 4.8% and volumes fell 10.4%.

Talbot said: “I am pleased to report that Glanbia’s performance in the first half of the year was ahead of our expectations as the group successfully navigated some continuing volatility in global market conditions.

“This was driven by a strong operating performance, continued demand for our better nutrition brands and ingredients and the exceptional commitment of our people. We are upgrading our guidance for FY 2023, with adjusted earnings per share now expected to grow by between 12% and 15% on a constant currency basis.”

Carlsberg upgrades annual profit forecasts

Carlsberg has lifted its profit expectations for the year following “a solid set of results” in the first half.

Revenues in the first six months of 2023 rose 6.6% to DKK 37.8bn (£4.4bn), while organic growth in Western Europe hit 9.2%, 11.7% in Asia and 16.3% in Central and Eastern Europe.

Organic volume growth of 0.8% was driven by a 4.8% rise in Asia, while the amount of beer sold in Western Europe declined 2.1% and 1.9% in Central and Eastern Europe.

The Danish group’s premium portfolio also saw volume growth of 3% in the half, led by a 52% jump for Brooklyn.

Alcohol-free brews registered a 1% fall in volumes in the half, but recovered to grow 2% in the second quarter.

Organic operating profits rose 5.2%, but at a reported level, after taking into account currency movement, profits fell 2.6% to DKK 6.3bn (£725m).

CEO Cees ’t Hart, who is leaving the group after eight years at the helm, said: “We’re satisfied with this solid set of results, which have been achieved in a challenging environment.

“This is the first year of executing our new strategy, SAIL’27, and we continued to invest in long-term health and growth opportunities despite significant inflation in our cost base. The strategic health of our business continues to improve, as seen from the growth of our international premium brands and continued growth in key markets in Asia.”

On the back of the first-half results, Carlsberg upgraded earnings expectations for the year and also initiated a new DKK 1bn share buy-back.

The group now expected organic growth in operating profits of 4-7%.

Hart also expressed ‘shock’ at the recent move by the Russian federal agency to take over its Russian brewery.

“We’re assessing the situation and the legal consequences of this highly unexpected move and will seek to protect our assets and the value of the business,” he added.

Morning shares movement

The FTSE 100 nudged back up after yesterday’s big falls, climbing 0.1% to 7,396.02pts.

Shares in Glanbia jumped 2.3% to €14.53 on the back of the annual upgrade, while Carlsberg fell 2.4% to DKK 997.

M&S climbed another 3.7% to 229.8p this morning, while Science in Sport was up 3.6% to 14.5p and Nichols was up 2% to 1,045p.

Yesterday in the City

The FTSE 100 crashed 1.6% to 7,389.64pts as record growth in pay makes further interest rate raises likely.

Shares in Marks & Spencer leapt 6.7% higher to 218.4p after a surprise earnings upgrade by the retailer, which in turn saw analysts lift stock price rating.

B&M shares also climbed a further 2.3% to 566.6p on expectations of it benefitting from the administration of Wilko.

Virgin Wine UK was also among the risers, jumping 4.1% to 38.5p.

Kerry Group fell 2.2% to €86.93 and Supermarket Income REIT dropped 1.6% to 74.6p.