Glanbia PLC · EURONEXT:GL9
Glanbia — FY2005 Earnings Presentation
32 slides from Glanbia's earnings presentation, Mar 16, 2006
Slide 1: 2005 Results
2605 RESULTS glanbia
Slide 2: Index
Index Page 2005 Overview 2 The Outlook 3 2005 Results 5 Exceptional Items 6 Operating Margin 7 Finance Costs and Taxation 8 Balance Sheet and Cash Flow 9 International Joint Ventures 10 Agribusiness and Property 11 Consumer Foods 12 Food Ingredients 13 2006 Market Commentary 14 Vision and Strategy 1
Slide 3: 2005 Overview
2005 • A satisfactory outcome overall • Good international performance; significant challenges in Ireland • Strategic development progressing well • Adjusted EPS in line with guidance • Increased dividend by 5% • Reduced Net Debt by 17% 2005 characterised by solid business execution and further prog
Slide 4: The Outlook
The Outlook • Ongoing market and cost challenges in Ireland • US operations expected to perform well • Further development in Nutritionals • Progressing to plan in International Joint Ventures 2006 results expected to be in line with current guidance Page 3
Slide 5: Results
Results A world of dairy e foods and nutritional g la n b la ingredients
Slide 6: Summary of Results
Summary of Results • A satisfactory outcome overall, despite a difficult year in Ireland 2005 2004 Change Revenue €1,830.0m €1,753.6m Up 4% Operating profit pre exceptional €80.6m €86.3m Down 7% Operating margin pre exceptional 4.4% 4.9% Down 50 bps Net financing cost pre exceptional (1) (€12.8m) (€
Slide 7: Exceptional Items
Exceptional Items • Ongoing drive for efficiency and productivity; minimum net cost €’ 000 Agribusiness (1,160) Consumer Foods (1) (11,860) Food Ingredients (2,649) Other (331) Prepayment of US$100 preferred securities (5,304) (21,304) IAWS share sale 10,959 FX credit arising from IFRS implementatio
Slide 8: Operating Margin
Operating Margin • 50bps decline in Group margin 2005 2004 • Reflecting Irish performance/weighting Group 4.4% 4.9% • Improvement overseas Ireland 4.4% 5.2% International 4.5% 4.2% • Reducing volatility over time • Objective remains average 5%+ by 2008 Page 7
Slide 9: Finance Costs and Taxation
Finance Costs and Taxation 2005 2004 Group interest (1) (12,786) (5,723) Non-equity minority interest - (10,387) Net financing costs pre exceptional (12,786) (16,110) • Net financing pre exceptional down 21% • Effective tax rate 11% • Interest cover 6.3 times (1) Due to the timing of the implementat
Slide 10: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • Net Debt €215.7 million, down 17% • Capital and development expenditure €71.6 million • Favourable Group refinancing completed • Reduction in investment in seasonal working capital • Pension deficit net of tax €149.1 million, an increase of €35 million Page 9
Slide 11: International Joint Ventures
International Joint Ventures • Share of Turnover up 18% to €112 million €’ 000 • Share of Profit, post interest and tax, up 160% 1000 • Strong performance from Glanbia Cheese 500 • Nigeria sales ahead of expectations 0 • Southwest Cheese progressing 2004 2005 -500 • Strong positive growth trends -10
Slide 12: Agribusiness and Property
Agribusiness and Property 2005 2004 • A difficult year Revenue €229.1m €227.4m • Poor global grain markets Operating Profit €10.7m €11.9m • Changing farm purchasing patterns Operating Margin 4.7% 5.2% • Turnover similar, lower profits and margins This division has 2 business units Agribusiness and P
Slide 13: Consumer Foods
Consumer Foods 2005 2004 • A mixed year; improved pigmeat offset by Revenue €493.6m €451.1m • Competitive liquid milk/chilled foods Operating Profit €27.1m €27.9m • Further rationalisation initiatives Operating Margin 5.5% 6.2% • Turnover up, profits similar, margins down This division includes liqu
Slide 14: Food Ingredients
Food Ingredients • Results reflects impact of MTR in Ireland 2005 2004 Revenue €1.11Bn €1.08Bn • Turnover up, profits and margins down Operating Profit €42.7m €46.4m • Ireland: significant downturn in H2 Operating Margin 3.9% 4.3% • Effects of reduced supports crystallised • Pricing and inflationary
Slide 15: 2006 Market Commentary
2006 Market Commentary • Expect to deliver results in line with current guidance Nutritionals Agribusiness • Growing market • Challenge is to adapt during change period • Ongoing review of acquisition/JV opportunities • Several initiatives (systems, products, branches) • Strong team in place to driv
Slide 16: Strategy
Strategy A world of dairy e foods and nutritional g la n b la ingredients
Slide 17: Vision and Strategy
Vision and Strategy To be the most relevant player in international cheese, nutritional and dairy ingredients and selected consumer foods … … .through a focus on international scale, food technologies and growth markets • Our objectives are to: • Diversify earnings base • Allocate capital to a mix o
Slide 18: International Focus
International Focus IRELAND INTERNATIONAL Divisions Agribusiness and Property Food Ingredients USA Consumer Foods Food Ingredients Ireland New Businesses Nutritionals (Global) Joint Ventures Glanbia Cheese UK Southwest Cheese USA Nutricima Nigeria Group Innovation and Human Resources Page 17
Slide 19: Nutritionals
Nutritionals Rationale • Consumer trends in functional foods • Market with high growth potential • Strong margins achievable • Key driver is focus on health & wellness Strategy • Increase R&D and innovation spend • Focus on new technologies/emerging markets • Grow through capacity expansion, JVs and
Slide 20: International Joint Ventures: USA
International Joint Ventures: USA Southwest Cheese • US$190 million investment • 50:50 Joint Venture • Cheese and whey facility • 340,000 ft2 building • 18 month scale up process • Full production mid-2007 • Annualised sales US$350 million Page 19
Slide 21: International Joint Ventures: Nigeria
International Joint Ventures: Nigeria Nutricima • US$25 million investment • 50:50 Joint Venture • Powdered and evaporated milk • Sales are meeting expectations • Strong growth/market demand • Population of 140 million • Annualised sales US$100 million Page 20
Slide 22: Group Innovation
Group Innovation • Two centres – Ireland and USA • 65 R&D professionals/scientists • Focus: • Nutritional solutions • Functional ingredients • Hand-held snacks/beverages Shifting focus from commodity led to market and innovation led business Page 21
Slide 23: Leading Market Positions
Leading Market Positions IRELAND INTERNATIONAL Divisions No. 1 Dairy processor USA: No. 1 Barrel cheese No. 1 Liquid milk/cream brand USA: No. 1 Whey protein isolate No. 1 Cheese/butter processor USA: No. 4 American cheddar No. 1 Pigmeat processor New Businesses Europe: No. 1 Supplier of customised
Slide 24: Summary
Summary • Current trading environment in Ireland is challenging • Group focus on costs, productivity and competitiveness • Growing internationalisation and scale • Focused science-based innovation agenda • International Joint Ventures developing to plan Steady progress towards double digit growth in
Slide 25: Supplementary Information
Supplementary Information A world of dairy e foods and nutritional g la n b la ingredients
Slide 26: About Us
About Us • An international dairy based food and nutritional ingredients Group • Headquartered in Kilkenny, Ireland; 3,800 employees worldwide • Operations in Ireland, UK, Germany, USA and Nigeria • Three operating divisions: Agribusiness & Property, Consumer Foods, Food Ingredients • Complemented b
Slide 27: Consolidated Income Statement
Consolidated Income Statement € million 2005 2004 Pre- Exceptional Total Total exceptional Revenue 1,830.0 - 1,830.0 1,753.6 Operating profit 80.6 (1.1) 79.5 89.1 Finance income and costs (1) (12.8) (5.3) (18.1) (16.1) Share of results of associates and joint ventures (2) 0.9 - 0.9 (1.5) Profit befo
Slide 28: Group Balance Sheet
Group Balance Sheet € million 2005 2004 Change Fixed assets 390.0 338.8 +51.2 Financial assets and investments 100.4 87.9 +12.5 Working capital 69.4 131.8 -62.4 559.8 558.5 +1.3 Non-current liabilities (55.4) (51.0) -4.4 Retirement benefit obligations (165.0) (126.7) -38.3 Net borrowings (215.7) (26
Slide 29: Group Cash Flow
Group Cash Flow € million 2005 2004 Inflows Operating profit 79.5 89.1 Depreciation and amortisation 25.4 26.4 Changes in working capital 62.5 (29.5) Disposals 5.2 82.8 172.6 168.8 Outflows Capital expenditure (47.0) (60.9) Acquisitions and investments (24.6) (65.4) Interest and tax (26.3) (25.5) Eq
Slide 30: Group Human Resources
Group Human Resources • Significant investment in building team with blend of skills • Science-based research and development professionals • Sales and marketing specialists • External senior management recruited to expand capabilities in core areas • Reward systems aligned to growth and performance
Slide 31: Contact us
Contact us Glanbia plc Glanbia House Kilkenny Ireland + 353 56 777 2200 + 353 56 777 2222 Investor Relations John Moloney, Group Managing Director Geoff Meagher, Deputy Group Managing Director / Group Finance Director Siobhán Talbot, Deputy Group Finance Director Media Relations Geraldine Kearney, G
Slide 32: Page 31
/43) 0S RESWUNS Glanbia ple Glanbia House Kilkenny, Ireland Tel: +353 56 777 2200 Fax: +353 56 777 2222 www.glanbia.com