26 february 2020 siobhán talbot mark garvey · eps 88.10c; in line with guidance but below...

Siobhán Talbot

Group Managing Director

Mark Garvey

Group Finance Director

26 February 2020

Glanbia plc FY 2019 Results2

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 underlying such forward-looking information, actual results may

differ materially from those expressed or implied by these forward-looking

statements. The Directors undertake no obligation to update any forward-

looking statements contained in this presentation, whether as a result of

new information, future events, or otherwise.


EPS 88.10c; in line with guidance but below ambition

Revenue growth driven by GN & acquisitions

Earnings impacted by challenges in GPN

Seeking authority for Share Buyback Programme

Full year dividend increased by 10%. Payout ratio 30%

Executing a clear strategy to address

GPN challenges, drive top & bottom

line momentum Operating cash conversion 86%

Continuing evolution of

GN Nutritional Solutions

through organic growth &

strategic acquisitions

Ongoing execution

Organisationalreview

Completed comprehensive

review of GPN strategy

across Brand, Geography

& Operational model

Regain growth momentum in GPN

4

Actions

Glanbia plc FY 2019 Results

JVs executing planned

strategy

Group-wide projects

initiated to target

productivity benefits from

leveraging scale

Series of initiatives

underway to deliver top-

line momentum & margin

improvement


Revenue

€1,363.8m+11.0% cc

EBITA

€146.4m-19.6% cc

Growing consumer reach

Driven by

Slimfast

Margin

10.7%

-410 bps

Challenging year on organic revenue & EBITA margin

Revenue growth driven by Slimfast

Margin decline driven by mix and negative operating leverage due to lower LFL revenue

cc – Constant Currency

Definitions and reconciliations of non-IFRS metrics can be found in the Appendix of this presentation and further information can be found in the Financial

Statements and Glossary

ON & Slimfast key platform

brands, 69% of branded

portfolio

Exiting US Contract business

Streamlining product portfolios

– SKU rationalisation

Refining approach to

innovation

Business re-organised

• NA Performance Nutrition

• NA Lifestyle

• International

• DTC

Talent investment across

the business

Detailed market-by-market

review completed

Responding to changing

market dynamics

Improving routes-to-market

in India & Brazil

Optimising the supply chain

7

Plan to drive revenue growth & margin improvement


Regaining growth momentum in the branded business

Targeting 200+ bps margin improvement by 2022

Brand Route-to-marketRe-organisation

NA – North America

DTC – Direct-to-Consumer


GPN’s platform brands which are key category players

$655m brand - Globally

GPN’s platform Performance Nutrition

brand Globally

Key formats - RTM Protein & Energy

$325m brand – US & UK

GPN’s platform brand in US and UK

lifestyle nutrition

Key formats – RTD & RTE


39% of total GPN sales (€538m)

ON key platform brand

ON consumption in 2019* mid-single digit growth

BSN & Isopure focused on specific channels & consumer segments

Positive pricing in H2

*NA measured channels captures 72% of total ON North America net sales

29% of total GPN sales (€392m)

Slimfast key platform brand

think! re-launched in RTE category

Slimfast 2019 consumption grew by 49% in measured channels*

Amazing Grass playing into Plant Nutrition trend

*NA measured channels captures 73% of total Slimfast North America net salesGlanbia plc FY 2019 Results10

26% of total GPN sales (€359m) (13% Europe / 13% RoW)

Double-digit decline in 2019

ON key platform brand

Business simplification commenced in 2019

Priority markets China, India, Oceania, UK and Western Europe



Engaging Consumers

Working with e-Commerce leaders

Building in-house DTC capability

ON campaign

1200 individual pieces of digital

content deployed across 25 markets

Online is GPN’s largest channel and digital capability is enabling growth worldwide

Installed Hybris e-Commerce platform

to enable scaling of business

Expanding in 2020 to be in a total of 14 markets

6% of total GPN sales

Other channels

74%

Online26%

2019

GPN Revenue

GN Operating Review


Expanding portfolio

Revenue

€744.9m+23.4% cc

EBITA

€100.0m+7.1% cc

Driven by organic growth & acquisition

Margin

13.4%

-210 bps

Revenue growth driven by premix in Asia, healthy snacking solutions & Watson acquisition

EBITA growth driven by volume

Strong growth in value-added functional ingredients

EBITA margin impacted by sales mix & tariff headwinds

Innovation continues to be a key driver of growth


Definitions and reconciliations of non-IFRS metrics can be found in the Appendix of this presentation and further information can be found in the Financial Statements

and Glossary


Acquired in Q1 2019

Complementary technologies &

supply chain to Nutritional Solutions

Customers across personal care

and food sectors

Integration on track

Healthy snacking technology

development

• High protein solutions

• Crisp technology

• Cereals & plant-based solutions

Enhanced solutions capability

Innovation

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwjQweqP_ZDgAhWDIVAKHb2DD-MQjRx6BAgBEAU&url=http://www.ctfoodbank.org/connecticut-food-bank-special-events/walk-against-hunger/watson-inc-logo-blue/&psig=AOvVaw2Q3KT0j2OncOyhzWfc-Zfz&ust=1548782090705745

Driven by capacity

expansion

Margin

1.7%

+10 bps

Revenue

€1,767.0m+18.5% cc

EBITA

€30.4m+23.6% cc


Scale dairy operations

Revenue growth driven by Southwest Cheese expansion and positive dairy markets

Margin expansion driven by good operating performance

Stable revenue & profit stream continued in FY 2019

Strong operational performance



and Glossary

JVs Operating Review


Scale dairy operations

Revenue

€1,476.1m+12.9% cc

Share of PAT

€48.6m+€3.3m

Driven by capacity

expansion

PAT

€48.6m

+5.9% cc

Revenue growth driven by volume across all Joint Ventures

PAT growth of 5.9% driven by capacity expansion and good operating performance

New JV in Ireland to be commissioned by end of 2020

Revenue and margin growth

New JV in Michigan USA to be commissioned by Q3 2021



and Glossary


2019 results summary

Pre-exceptional

€'m

Reported currencyConstant

currency

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%)

EBITA margin 7.1% 9.0% -190 bps -190 bps

Amortisation (60.9) (45.9) (15.0)

Net Finance Costs (26.3) (17.5) (8.8)

Share of Joint Ventures 48.6 45.3 3.3

Income Tax (23.4) (32.8) 9.4

Profit for the period (pre-exceptional) 214.8 234.0 (19.2)

Adjusted EPS 88.10 91.01 (2.91) (7.7%)

Basic EPS 61.04 79.28 (18.24) (26.6%)

Drivers of wholly-owned

Revenue growth

• 9.9% contribution from acquisitions

• 6.6% increase in pricing

Effective tax rate of 12.3% (2018: 14.8%)

• Primarily driven by geographic mix of

profits

EBITA margin impacted by

• Negative operating leverage

• Impact of product mix

• Tariff headwinds


and Glossary

1 – Restated to reflect the adoption of IFRS 15


€1,179.6m

€1,363.8m

FY18 FX Volume Price Acquisition FY19

Challenging markets impacting volume – Review completed, actions to address under way

4.2%

(9.0%) (0.6%)

20.6%


€577.0m

€744.9m

FY18 FX Volume Price Acquisition FY19

Nutritional Solutions

€1,413.9m

€1,767.0m

FY18 FX Volume Price FY19

US Cheese

22

Organic growth with strong benefit from Watson acquisition

4.6%7.0% 3.8%

12.6%

5.5%4.9%

13.6%


Exceptional Items2019

€'000

Organisation redesign costs 12.7

Asset impairments 17.3

Acquisition integration costs 6.8

Brexit related costs 2.3

Total exceptional charge before taxation 39.1

Exceptional tax credit (4.5)

Total exceptional charge after taxation 34.6

Organisation Redesign

• To position GPN for future growth

Acquisition Integration

• Costs related to the integration of

Slimfast & Watson

Asset Impairment – Business

Simplification

• Rationalisation of 35% of GPN total

SKUs completed

Brexit mitigation

Initiatives commenced to restore growth in GPN


Maintaining strong cash flow generation

FY19 EBITDA Working Capital Business SustainingCapex

FY19 Operating CashFlow

Net Interest & Tax Dividends from JVs Pension Other FY19 Free Cash Flow

€324.9m (€24.9m)

(€20.1m)

€279.9m (€74.1m)

€35.3m (€7.6m)(€2.0m) €231.5m

OCF – Operating Cash Flow


and Glossary


€24m €16m €20m

€49m€46m

€56m

€168m

€313m

€61m

€42m

€48m

2017 2018 2019

Sustaining Capex Strategic Capex Acquisitions Investments in JVs

Strategic projects to benefit product and proposition

Investment in innovation

and online platforms to

enhance DTC offering

Expansion of manufacturing

facilities

ROCE

13.2% 10.9%2018 2019

€185m

€417m

€241m

Within target range of

10% - 13%

Acquisition of Watson


Balance Sheet KPI's FY 2019 FY 2018

Net Debt €614.3m €576.7m

Net Debt / Adj. EBITDA 1.71x 1.55x

Adj. EBIT / Net Financing Costs 9.3x 14.8x

26

Well positioned for future growth

Higher debt due to acquisitions

and investments

Well within covenants with

ample headroom to finance

further activity

Strong cash flow will enable

de-leveraging

ROCE – Return on Capital Employed


and Glossary


Efficient Balance Sheet

Strong Operating Cash flow

Generation

ROCE Range of 10% - 13%

Capex

Dividend

M&A

Additional

Returns

Investments which

support growth

Complementary

businesses

Payout ratio in the range

25% - 35% Share Buyback


Returning GPN to sustainable topline growth in 2020

Targeting GPN margin growth of 200+ bps by 2022

Focused on creating shareholder value

Commenced Group-wide productivity review

30

Avg. EPS Growth

5% - 10%

ROCE – Return on Capital Employed


and Glossary

Average adjusted EPS on a constant currency basis over the 2020 – 2022 period

2020 - 2022

Cash conversion

>80%

ROCE

10% - 13%

Dividend payout

25% - 35%

Total Group Revenue by 2022

€6bn


Earnings

Operating Cash Conversion

Adjusted EPSBroadly in line with prior

year on a constant

currency basis

Greater than

80%

31

Rebuilding Growth Momentum


Questions


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 GlanbiaOperating Executive in assessing performance and for reporting both internally and to shareholders and other external users. The Group believes that the presentation ofthese non-IFRS performance measures provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides readerswith a more meaningful understanding of the underlying financial and operating performance of the Group.

1. While the Group reports its results in euro, it generates a significant proportion of its earnings in currencies other than euro, in particular US dollar. Constant currency reporting isused by the Group to eliminate the translational effect of foreign exchange on the Group's results. To arrive at the constant currency year-on-year change, the results for the prior yearare retranslated using the average exchange rates for the current year and compared to the current year reported numbers

2. The Group has a number of strategically important Equity accounted investees (Joint Ventures) which when combined with the Group’s wholly-owned businesses give an importantindication of the scale and reach of the Group’s operations. Total Group is used to describe certain financial metrics such as Revenue and EBITA when they include both the wholly-owned businesses and the Group's share of Equity accounted investees

3. Revenue comprises sales of goods and services of the wholly-owned businesses to external customers net of value-added tax, rebates and discounts

4. EBITA is defined as earnings before interest, tax and amortisation

5. EBITA margin is defined as EBITA as a percentage of revenue

6. EBITDA is defined as earnings before interest, tax, depreciation (net of grant amortisation) and amortisation

7. Adjusted EPS is defined as the net profit attributable to the equity holders of Glanbia plc, before exceptional items and intangible asset amortisation (excluding amortisation ofsoftware costs) net of related tax, divided by the weighted average number of ordinary shares in issue during the year. The Group believes that adjusted EPS is a better measure ofunderlying performance than Basic EPS as it excludes exceptional items (net of related tax) that are not related to ongoing operational performance and intangible asset amortisation,which allows better comparability of companies that grow by acquisition to those that grow organically

8. Net debt : adjusted EBITDA is calculated as net debt at the end of the period divided by adjusted EBITDA. Net debt is calculated as total financial liabilities less cash and cashequivalents. Adjusted EBITDA is calculated as EBITDA for the wholly-owned businesses plus dividends received from Equity accounted investees, and in the event of an acquisition inthe year, includes pro-forma EBITDA as though the acquisition date had been at the beginning of the year. Adjusted EBITDA is a rolling 12 month measure


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 borrowing costs. Adjusted EBIT and net finance cost are rolling 12month measures

10. The Group has adopted an income statement format that seeks to highlight significant items within the Group results for the year. Such items may include impairment of assets,adjustments to contingent consideration, material acquisition integration costs, restructuring costs, profit or loss on disposal or termination of operations, material acquisition costs,litigation settlements, legislative changes, gains or losses on defined benefit pension plan restructuring and profit or loss on disposal of investments. Judgement is used by the Group inassessing the particular items which by virtue of their scale and nature should be disclosed in the income statement and notes as exceptional items

11. Volume increase/(decrease) represents the impact of sales volumes within the revenue movement year-on-year, excluding volume from acquisitions, on a constant currency basis.Pricing increase/(decrease) represents the impact of sales pricing within the revenue movement year-on-year, excluding acquisitions, on a constant currency basis

12. Like-for-like branded revenue growth represents the sales growth / (decline) year-on-year on branded sales, excluding acquisitions, on a constant currency basis

13. The effective tax rate is defined as the pre-exceptional income tax charge divided by the profit before tax less share of results of Equity accounted investees

14. The Group defines business sustaining capital expenditure as the expenditure required to maintain/replace existing assets with a high proportion of expired useful life. Thisexpenditure does not attract new customers or create the capacity for a bigger business. It enables the Group to keep running at current throughput rates but also keep pace withregulatory and environmental changes as well as complying with new requirements from existing customers

15. The Group defines strategic capital expenditure as the expenditure required to facilitate growth and generate additional returns for the Group. This is generally expansionaryexpenditure beyond what is necessary to maintain the Group’s current competitive position

16. Operating cash conversion is defined as Operating Cash Flow (OCF) divided by pre-exceptional EBITDA. Cash conversion is a measure of the Group’s ability to convert tradingprofits into cash and is an important metric in the Group’s working capital management programme

17. ROCE is defined as the Group’s earnings before interest, and amortisation (net of related tax) plus the Group’s share of the results of Equity accounted investees after interest andtax divided by capital employed. Capital employed comprises the sum of the Group’s total assets plus cumulative intangible asset amortisation less current liabilities less deferred taxliabilities excluding all financial liabilities, retirement benefit assets and cash. It is calculated by taking the average of the relevant opening and closing balance sheet amounts

18. Dividend payout ratio is defined as the annual dividend per ordinary share divided by the adjusted Earnings Per Share


€'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) 45.3 34.6 36.3

Adjusted net income 260.1 268.6 281.8

Weighted average number of ordinary shares in issue (millions) 295.2 295.2 295.2

Adjusted Earnings Per Share (cent) 88.10c 91.01c 95.49c



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


Glanbia Nutritionals FY 2019 FY 2018 FY 2018 % Change

Revenue 2,511.9 1,990.9 2,095.4 +19.9%

EBITA 130.4 111.8 118.0 +10.5%

EBITA margin 5.2% 5.6% 5.6% -40 bps

Following implementation of IFRS 15 prior year revenue was restated to reflect the impact of recognising sales from Glanbia’s Joint Venture Southwest Cheese.

The impact was to increase prior year sales in Glanbia Nutritionals by €784 million in FY 2018; there was no change to EBITA following this restatement



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


US Cheese FY 2019 FY 2018 FY 2018 % Change

Revenue 1,767.0 1,413.9 1,491.7 +18.5%

EBITA 30.4 23.2 24.6 +23.6%

EBITA margin 1.7% 1.6% 1.6% +10 bps

Following implementation of IFRS 15 prior year revenue has been restated above to reflect the impact of recognising sales from Glanbia’s Joint Venture Southwest Cheese.

The impact was to increase prior year sales in Nutritional Solutions and US Cheese by €50 million and €734 million respectively for FY 2018; there was no change to EBITA

following this restatement



Total Group Revenue FY 2019 FY 2018 FY 2018 % Change

Glanbia Performance Nutrition 1,363.8 1,179.6 1,228.7 +11.0%

Glanbia Nutritionals 2,511.9 1,990.9 2,095.4 +19.9%

Wholly Owned Revenue 3,875.7 3,170.5 3,324.1 +16.6%

Equity accounted investees 1,476.1 1,283.8 1,307.3 +12.9%

IFRS 15 Consolidation adjustment (539.3) (415.1) (437.2)

Total Group 4,812.5 4,039.2 4,194.2 +14.7%


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%

Following implementation of IFRS 15 prior year revenue was restated to reflect the impact of recognising sales from Glanbia’s Joint Venture Southwest Cheese.

The impact was to increase prior year sales in Glanbia Nutritionals by €784 million in FY 2018; there was no change to EBITA following this restatement

26 february 2020 siobhán talbot mark garvey · eps 88.10c; in line with guidance but below...

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