Irish cheese manufacturer Glanbia has been forced to issue a profits warning as dairy prices slump to “historic lows”.

The international food group said it would fail to meet an earlier forecast for a hike in 2009 earnings, blaming further deterioration in key global dairy markets.

Glanbia’s shares almost 8% after it said it expected earnings per share of 30 to 32 cents for 2009, compared with market expectations of between 36 to 37 cents.

Although the group has reduced its manufacturing costs, it said raw ingredient prices were above a level at which the business could break even.

“These are difficult times for the global dairy sector with market prices at historic lows,” said managing director John Moloney.

“In the longer term, we are confident of Ireland’s ability to have a sustainable and profitable dairy sector but this will require restructuring across the industry.”