Glanbia Plc · EURONEXT:GL9
Glanbia — FY2019 Earnings Presentation
39 slides from Glanbia's earnings presentation, Feb 26, 2020
Slide 1: FY 2019 Results
26 February 2020 Siobhán Talbot Mark Garvey Group Managing Director Group Finance Director
Slide 2: Forward-looking statements
This presentation contains forward-looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this presentation. Due to the inherent uncertainties, including both economic and business risk factors
Slide 3: EPS 88.10c; in line with guidance but below ambition
EPS 88.10c; in line with guidance but below ambition Revenue growth driven by GN & acquisitions Executing a clear strategy to address Earnings impacted by challenges in GPN GPN challenges, drive top & bottom line momentum Operating cash conversion 86% Full year dividend increased by 10%. Payout rati
Slide 4: Actions
Actions Regain growth Organisational Ongoing momentum in GPN review execution Completed comprehensive Group-wide projects Continuing evolution of review of GPN strategy initiated to target GN Nutritional Solutions across Brand, Geography productivity benefits from through organic growth & & Operatio
Slide 5: Glanbia
glanbia
Slide 6: GPN revenue and EBITA
Growing consumer reach Challenging year on organic revenue & EBITA Revenue EBITA margin €1,363.8m €146.4m +11.0% cc -19.6% cc Revenue growth driven by Slimfast Margin Driven by 10.7% Margin decline driven by mix and negative Slimfast operating leverage due to lower LFL revenue -410 bps cc – Constant
Slide 7: Plan to drive revenue growth & margin improvement
Regaining growth momentum in the branded business Plan to drive revenue growth & margin improvement Brand Re-organisation Route-to-market ON & Slimfast key platform Business re-organised Detailed market-by-market brands, 69% of branded • NA Performance Nutrition review completed portfolio • NA Lifes
Slide 8: GPN's platform brands which are key category players
GPN’s platform brands which are key category players $655m brand - Globally $325m brand – US & UK GPN’s platform Performance Nutrition GPN’s platform brand in US and UK brand Globally lifestyle nutrition Key formats - RTM Protein & Energy Key formats – RTD & RTE 8 Glanbia plc FY 2019 Results
Slide 9: Optimum Nutrition: 39% of total GPN sales
39% of total GPN sales (€538m) ON key platform brand BSN & Isopure focused on specific channels & consumer segments ON consumption in 2019* mid-single digit growth Positive pricing in H2 9 Glanbia plc FY 2019 Results *NA measured channels captures 72% of total ON North America net sales
Slide 10: Slimfast: 29% of total GPN sales
29% of total GPN sales (€392m) Slimfast key platform brand Slimfast 2019 consumption grew by 49% in measured channels* think! re-launched in RTE category Amazing Grass playing into Plant Nutrition trend 10 Glanbia plc FY 2019 Results *NA measured channels captures 73% of total Slimfast North America
Slide 11: International: 26% of total GPN sales
26% of total GPN sales (€359m) (13% Europe / 13% RoW) Double-digit decline in 2019 Business simplification commenced in 2019 ON key platform brand Priority markets China, India, Oceania, UK and Western Europe 11 Glanbia plc FY 2019 Results
Slide 12: Online is GPN's largest channel
Online is GPN’s largest channel and digital capability is enabling growth worldwide GPN Building in-house Working with e- Engaging Revenue DTC capability Commerce leaders Consumers Online 26% 6% of total GPN sales Installed Hybris e-Commerce platform to enable scaling Other of business ON campaign c
Slide 13: GN Operating Review
GN Operating Review
Slide 14: Nutritional Solutions revenue and EBITA
Strong growth in value-added functional ingredients Expanding portfolio Revenue growth driven by premix in Asia, healthy snacking solutions & Watson acquisition Revenue EBITA €744.9m €100.0m EBITA growth driven by volume +23.4% cc +7.1% cc Innovation continues to be a key driver of growth Driven by
Slide 15: Innovation
Innovation Acquired in Q1 2019 Healthy snacking technology development Complementary technologies & • High protein solutions supply chain to Nutritional Solutions • Crisp technology • Cereals & plant-based solutions Customers across personal care and food sectors Enhanced solutions capability Integr
Slide 16: US Cheese revenue and EBITA
Strong operational performance Scale dairy operations Revenue growth driven by Southwest Cheese Revenue EBITA expansion and positive dairy markets €1,767.0m €30.4m +18.5% cc +23.6% cc Stable revenue & profit stream continued in FY 2019 Driven by Margin 1.7% Margin expansion driven by good operating
Slide 17: JVs Operating Review
JVs Operating Review
Slide 18: Joint Ventures revenue and share of PAT
Revenue and margin growth Scale dairy operations Revenue growth driven by volume across all Joint Ventures Revenue Share of PAT €1,476.1m €48.6m PAT growth of 5.9% driven by capacity expansion and good operating performance +12.9% cc +€3.3m New JV in Ireland to be commissioned by end of 2020 New JV
Slide 19: Glanbia
glanbia
Slide 20: 2019 results summary
2019 results summary Drivers of wholly-owned Constant Revenue growth Pre-exceptional Reported currency currency €'m • 9.9% contribution from acquisitions • 6.6% increase in pricing 2019 2018 Change Change Revenue (Wholly-owned) 3,875.7 3,170.5¹ 705.2 16.6% EBITA (Wholly-owned) 276.8 284.9 (8.1) (7.8
Slide 21: GPN revenue bridge FY18 to FY19
Challenging markets impacting volume – Review completed, actions to address under way 20.6% 4.2% (9.0%) (0.6%) €1,363.8m €1,179.6m FY18 FX Volume Price Acquisition FY19 21 Glanbia plc FY 2019 Results
Slide 22: Nutritional Solutions and US Cheese revenue bridges
Organic growth with strong benefit from Watson acquisition Nutritional Solutions 12.6% 7.0% 3.8% 4.6% €744.9m €577.0m FY18 FX Volume Price Acquisition FY19 US Cheese 13.6% 4.9% 5.5% €1,767.0m €1,413.9m FY18 FX Volume Price FY19 22 Glanbia plc FY 2019 Results
Slide 23: Exceptional items and GPN initiatives
Initiatives commenced to restore growth in GPN Organisation Redesign 2019 Exceptional Items • To position GPN for future growth €'000 Organisation redesign costs 12.7 Asset Impairment – Business Asset impairments 17.3 Simplification • Rationalisation of 35% of GPN total Acquisition integration costs
Slide 24: Maintaining strong cash flow generation
Maintaining strong cash flow generation €324.9m (€24.9m) (€20.1m) €279.9m (€74.1m) €35.3m (€7.6m) (€2.0m) €231.5m FY19 EBITDA Working Capital Business Sustaining FY19 Operating Cash Net Interest & Tax Dividends from JVs Pension Other FY19 Free Cash Flow Capex Flow OCF – Operating Cash Flow 24 Glanbi
Slide 25: Strategic projects to benefit product and proposition
Strategic projects to benefit product and proposition €417m 13.2% 10.9% 2018 2019 €42m ROCE Acquisition of Watson €241m Investment in innovation €313m and online platforms to €185m enhance DTC offering €168m €48m Expansion of manufacturing €61m facilities €49m €56m €46m Within target range of €24m €
Slide 26: Balance Sheet KPIs
Well positioned for future growth Higher debt due to acquisitions Balance Sheet KPI's FY 2019 FY 2018 and investments Well within covenants with Net Debt €614.3m €576.7m ample headroom to finance further activity Strong cash flow will enable Net Debt / Adj. EBITDA 1.71x 1.55x de-leveraging Adj. EBIT
Slide 27: Capital allocation
Capex M&A Investments which Efficient Balance Complementary support growth Sheet businesses Strong Operating Cash flow Generation Dividend ROCE Range of Additional Payout ratio in the range 10% - 13% Returns 25% - 35% Share Buyback 27 Glanbia plc FY 2019 Results
Slide 28: Glanbia
glanbia
Slide 29: Returning GPN to sustainable topline growth in 2020
Returning GPN to sustainable topline growth in 2020 Targeting GPN margin growth of 200+ bps by 2022 Commenced Group-wide productivity review Focused on creating shareholder value 29 Glanbia plc FY 2019 Results
Slide 30: 2020-2022 targets
2020 - 2022 Avg. EPS Growth ROCE Total Group 10% - 13% Revenue by 2022 5% - 10% €6bn Cash conversion Dividend payout >80% 25% - 35% ROCE – Return on Capital Employed Definitions and reconciliations of non-IFRS metrics can be found in the Appendix of this presentation and further information can be f
Slide 31: 2020 outlook: Rebuilding growth momentum
Rebuilding Growth Momentum Operating Earnings Cash Conversion Adjusted EPS Greater than Broadly in line with prior year on a constant currency basis 80% 31 Glanbia plc FY 2019 Results
Slide 32: Questions
glanbia DELIVERING BETTER NUTRITION
Slide 33: Appendix
glanbia
Slide 34: Non-IFRS performance measures
The Group reports certain performance measures that are not defined under IFRS but which represent additional measures used by the Board of Directors and the Glanbia Operating Executive in assessing performance and for reporting both internally and to shareholders and other external users. The Group
Slide 35: Non-IFRS measure definitions
9. Adjusted EBIT: net finance cost is calculated as pre-exceptional earnings before interest and tax plus dividends received from Equity accounted investees divided by net finance cost. Net finance cost comprises finance costs less finance income per the Group Income Statement plus capitalised borro
Slide 36: Adjusted earnings per share reconciliation
€'m Reported Constant currency Adjusted Earnings Per Share FY 2019 FY 2018 FY 2018 Profit attributable to the equity holders of the Company 180.2 234.0 245.5 Exceptional Items 34.6 Profit attributable to the equity holders of the Company – pre-exceptional 214.8 234.0 245.5 Amortisation (net of tax)
Slide 37: GPN and Glanbia Nutritionals results
€'m Reported Constant currency Glanbia Performance Nutrition FY 2019 FY 2018 FY 2018 % Change Revenue 1,363.8 1,179.6 1,228.7 +11.0% EBITA 146.4 173.1 182.2 -19.6% EBITA margin 10.7% 14.7% 14.8% -410 bps €'m Reported Constant currency Glanbia Nutritionals FY 2019 FY 2018 FY 2018 % Change Revenue 2,5
Slide 38: Nutritional Solutions and US Cheese results
€'m Reported Constant currency Nutritional Solutions FY 2019 FY 2018 FY 2018 % Change Revenue 744.9 577.0 603.7 +23.4% EBITA 100.0 88.6 93.4 +7.1% EBITA margin 13.4% 15.4% 15.5% -210 bps €'m Reported Constant currency US Cheese FY 2019 FY 2018 FY 2018 % Change Revenue 1,767.0 1,413.9 1,491.7 +18.5%
Slide 39: Joint Ventures and Total Group revenue
€'m Reported Constant currency Joint Ventures FY 2019 FY 2018 FY 2018 % Change Revenue 1,476.1 1,283.8 1,307.3 +12.9% EBITA 73.6 65.8 67.1 +9.7% EBITA margin 5.0% 5.1% 5.1% -10 bps Share of JVs PAT 48.6 45.3 45.9 +5.9% €'m Reported Constant currency Total Group Revenue FY 2019 FY 2018 FY 2018 % Chan