glanbiacage conference 2014 cage 2014 2 cautionary statement this presentation contains...

CAGE 2014 www.glanbia.com 1 www.glanbia.com

GLANBIA

17 March 2014

CAGE CONFERENCE 2014

CAGE 2014 www.glanbia.com 2

CAUTIONARY STATEMENT

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.


GLANBIA OVERVIEW

Market Capitalisation

€3.3 billion

2013 Revenue

€3.3 billion Employees

5,202

LEADING GLOBAL PERFORMANCE NUTRITION AND INGREDIENTS GROUP

Countries of Operation

29 Export Markets

130+


TOTAL GROUP REVENUE

SEGMENTAL OVERVIEW

€3.3bn 53%

TOTAL GROUP EBITA

€227m 76%

Branded sports nutrition:

• ON

• BSN

• ABB

• Nutramino

• Consumer Products

• Agribusiness

• Glanbia Ingredients Ireland

• Southwest Cheese

• Glanbia Cheese

• Nutricima

GLOBAL PERFORMANCE

NUTRITION

DAIRY IRELAND

JOINT VENTURES & ASSOCIATES

GLOBAL INGREDIENTS

• US Cheese

• Ingredient Technologies

• Customised Solutions €1,075m* €655m*

€652m* €901m*

* Revenue


OUR MARKET OPPORTUNITY

MARKET BACKDROP

DEMAND FOR FOOD QUALITY &

TRACEABILITY

GROWING GLOBAL MIDDLE CLASS ADOPTING WESTERN DIETS

ADVANCEMENTS IN NUTRITION SCIENCE & FOOD TECHNOLOGIES

GLOBAL POPULATION GROWTH & FOOD SUPPLY CONCERNS

RISING HEALTHCARE

COSTS

INCREASED FREQUENCY &

INTENSITY OF EXERCISE IN MODERN LIFESTYLES

MACRO TRENDS

MACRO TRENDS

EVOLVING CONSUMER MARKETS

GROWTH OF MULTIPLE NUTRITION SEGMENTS

INCREASING DEMAND FOR HIGHER NUTRIENT DENSITY IN MAINSTREAM DIETS

INCREASING UNDERSTANDING OF SYNERGISTIC BENEFITS OF EXERCISE AND DIETS

INCREASING DEMAND FOR SUPPLEMENTS AND NATURAL PREVENTION

GROWING PREVALENCE OF SNACK-BASED MEAL REPLACEMENT

DEMAND FOR INGREDIENT AUTHENTICITY AND TRACEABILITY


OUR MARKET OPPORTUNITY

OUR TWO GROWTH PLATFORMS

B2B B2C GLOBAL INGREDIENTS

GLOBAL PERFORMANCE NUTRITION

• We will harness increased penetration of sports nutrition category through brand strength, breadth of product range and global presence.

• We are trusted leaders in the specialty retail and online channels where new consumers are engaging with the category.

• We are ideally positioned to address demand for higher nutrient density and cleaner labels.

• Our portfolio of nutritional ingredients and technologies enables customers to incorporate our solutions into multiple nutrition categories, channels and formats.


OUR BRANDS

http://www.nutramino.com/


MARKET PROFILE

US MARKET BY CHANNEL GLOBAL MARKET BY REGION US MARKET BY FORMAT

LAPAC, 10%

EMEA, 25%

US, 65%

Other, 18% Specialty,

50%

Internet, 16%

Mass, 16%

Caps & Tabs, 6%

Powder, 85%

RTD, 9%

GLANBIA FOCUS

US largest market but strong and fast growing

presence in EMEA/LAPAC

Primary focus on Specialty and Internet

Primary focus on Powder across protein,

pre-workout, muscle gainers and builders

$5.1bn $3.3bn $3.3bn

1.Market sizes are on an MSP basis 2.Source: by region – internal; channel & format - New Business Journal


INTERNATIONAL EXPANSION

• 30% + of revenues ex-US

• Proven and repeatable roll-out model

• In-market presence in 19 countries currently (from 0 in 2009)

• Strong affinity for US brands

• Global marketing strategy tailored for each market

• Significant investment in compliance with local regulations

CASE STUDY: AUSTRALIA

2011: country manager appointed

2010-2013: 54% revenue CAGR

2014: #2/#3 market position

2014: 13-strong sales presence

8

12

19

2011 2012 2013

IN-MARKET PRESENCE

# OF COUNTRIES


DEEP CONNECTION WITH OUR CONSUMER

• Tailor made marketing model

• Lead through engagement

• Connect on consumer’s terms

• Major online and social presence

85

74

ONLINE PRESENCE

Fans

1.4m+ Views

18.4m+ Followers

123k+ Unique visitors

4.1m per annum

NET PROMOTER SCORE


UNIQUE COMPETITIVE ADVANTAGE

AS A BUSINESS AS A BRAND PORTFOLIO

First and fast mover

Entrepreneurial culture

Vertically integrated scale

Market leading partnerships

Repeatable business model

Corporate parent

Wide-user base

Key categories

Quality and compliance

Innovative

Trusted, high NPS score

Strong emotional connection


GLOBAL INGREDIENTS


GLOBAL INGREDIENTS

Ingredient Technologies

Customised Solutions

US Cheese

• B2B ingredients

• €1.1bn revenue

• Three distinct but related business units

• Large scale integrated cheese and whey manufacturing

• Value-added dairy & non-dairy ingredients and premix solutions


GLOBAL INGREDIENTS

LARGEST MANUFACTURER OF AMERICAN STYLE CHEDDAR CHEESE

US CHEESE

BUSINESS MODEL

END MARKETS

• Large scale efficient operator

• Focus on operational excellence

• Market leader in innovation

• Retail, foodservice, ingredients & exports

• Steady market growth profile

ROLE OF JOINT VENTURES

• US Cheese commercialises all output from Southwest Cheese JV

• Future expansion likely through JV model


GLOBAL INGREDIENTS

INGREDIENT TECHNOLOGIES

SCIENCE-LED NUTRITIONAL AND FUNCTIONAL INGREDIENT SOLUTIONS PROVIDER

INGREDIENT FOCUS

HIGH GROWTH END MARKETS

• Dairy-based ingredients

• Specialty grain ingredients

• Aseptic beverages

• Healthy ageing, sports nutrition, infant formula, nutrition bars & beverages,

• Developed & developing markets

INNOVATION

• Customer collaboration

• Proprietary technologies

• Market insights


GLOBAL INGREDIENTS

CUSTOMISED SOLUTIONS

#2 GLOBAL PROVIDER OF CUSTOM-BLENDED PREMIXES

BUSINESS MODEL

END MARKETS

• Blends vitamins & minerals according to exact specifications

• Strong global footprint with facilities in the US, Germany & China

• Range of end markets with differing growth profiles

• Infant nutrition, beverages, sports nutrition, dairy, supplements

KEY USPs

• Customer service

• Reliability

• Track record


STRATEGY OVERVIEW


OUR VALUE CHAIN

B2C

B2B

CONSUMER BRANDS

SOLUTIONS & SYSTEMS

SPECIALTY INGREDIENTS

BASE INGREDIENTS

Optimum Nutrition

BSN

ABB

Nutramino

Dairy-based protein systems

Vitamin & mineral premixes

Specialty grain systems

Aseptic beverages

Cheese

Base whey

Other dairy ingredients

High protein dairy ingredients

Specialty milk minerals/proteins

Specialty grains

OUR BRANDS

OUR PRODUCTS

ADDING VALUE TO OUR PORTFOLIO BY MOVING UP THE VALUE CHAIN IS KEY TO OUR STRATEGY


OUR STRATEGY

1. Sustain current and drive further

market leadership positions

within both B2B and B2C global

growth platforms

2. Deliver strategic capital

investment programme

3. Acquire or partner with

complementary businesses to

scale our current portfolio

4. Develop talent, culture and

values, in line with our growing

global scale

B2B

B2C

GLOBAL INGREDIENTS


• Sustain leadership position in American-style cheddar cheese;

• Leverage whey expertise and add to protein ingredients and systems;

• Strengthen market position in premix solutions; and

• Look to scale dairy and non-dairy ingredients.

• Grow in US specialty and internet channels;

• Focus on high-growth markets and continue with rapid international expansion;

• Venture into new markets, channels and consumer segments; and

• Enhance capabilities in marketing, sales, supply chain and product innovation.

OVERALL GROUP OUR GROWTH PLATFORMS


FINANCE OVERVIEW


INVESTMENT AND RETURNS

• €390m investment over last 3 years incl. acquisitions

• €120m for 2014 reflecting range of attractive opportunities

• Disciplined approach to both M&A and capex spending

• Strong track record of returns delivery

• FY2013 ROCE: 14.2%

0

50

100

150

200

2010 2011 2012 2013

Bus. Sustaining Strategic Acquisitions

Significant investment programme.... €m

8.0%

10.0%

12.0%

14.0%

16.0%

2010 2011 2012 2013

... with strong track record for ROCE



Cost: €50 million

Commissioning: Q2 2014 (Phase 1)


Cost: €22 million

Commissioned: Q4 2013

US CHEESE

Cost: €8 million

Commissioned: Q2 2013

CAPEX & ACQUISITION HIGHLIGHTS

NEW PRODUCTION PLANT

SPECIALTY GRAIN PROCESSING FACILITY

CHEESE INNOVATION CENTRE

STRONG TRACK RECORD FOR CAPEX & M&A


Cost: $315 million

Acquisition date: 2008


Cost: $144 million



Cost: $60 million


ASEPTIC SOLUTIONS

OPTIMUM NUTRITION

BSN


0

100

200

300

400

500

2014 2015 2016 2017 2018 2019 2020 2021

€264m Undrawn

FINANCIAL FLEXIBILITY

• Strong balance sheet

• Net debt €374 million at Dec-13

• 1.7x net debt / adj. EBITDA

• Current committed debt facilities of €744 million

• Favourable debt maturity profile

• Potential for equity financing

Favourable debt maturity profile €m

1.5x

2.0x

2.5x

3.0x

2008 2009 2010 2011 2012 2013

Net debt / EBITDA

€39m

€467m

€238m

€203m Drawn


HISTORIC FINANCIALS HIGHLIGHTS

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Adjusted earnings per share 2000-2013 CAGR 12.8%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

EBITA margin +450bps from 2000-2013


2013 FINANCIAL HIGHLIGHTS

TOTAL GROUP REVENUE

TOTAL GROUP EBITA

TOTAL GROUP EBITA %

ADJUSTED EPS

FREE CASH FLOW

ROCE

€3.3bn

€226.7m

6.9%

55.46c

€87.6m

14.2%

CONSTANT CURRENCY CHANGE

+10.5%

+9.2%

-10bps

+11.9%

+8.0%

+5.6%

-20bps

+8.0%

+35.2%

+10bps

CHANGE

GOOD TOP AND BOTTOM LINE GROWTH


2013 FINANCIAL HIGHLIGHTS

3,038

3.0%

3.8%

0.7%

3.0%

3,283

-2.5%

3,000

3,050

3,100

3,150

3,200

3,250

3,300

3,350

3,400

FY12 GlobalPerformance

Nutrition

GlobalIngredients

Dairy Ireland JV&As FX FY13

TOTAL GROUP REVENUE GROWTH +10.5%*

215

7.5%

3.7%

0.9%

227

-2.9%

-3.6%

200

205

210

215

220

225

230

235

240

245

FY12 GlobalPerformance

Nutrition

GlobalIngredients

Dairy Ireland JV&As FX FY13

TOTAL GROUP EBITA GROWTH +9.2%*

* Constant currency

€m €m


PERFORMANCE OUTLOOK

ORGANIC EARNINGS1

8% TO 10% RETURN ON CAPITAL EMPLOYED

12% +

1. Five year adjusted earnings per share CAGR on a constant currency basis.

• Overall positive outlook for 2014

• Underpinned by our two global growth platforms

• In particular Global Performance Nutrition

• Guiding 8% to 10% growth in adjusted EPS on a constant currency basis

LONG TERM FINANCIAL TARGETS 2014 OUTLOOK


Q&A


APPENDIX


SEGMENTAL OVERVIEW

1. Glanbia disposed of a 60% interest in Glanbia Ingredients Ireland Limited (“GIIL”) in November 2012. GIIL is now a 40% associate of the Group. To aid comparability, 2012 results have been restated to show GIIL as an associate for the full year.

2013 Constant currency change

€m Revenue EBITA Margin Revenue EBITA Margin

Global Performance Nutrition 655.3 70.6 10.8% +15.7% +27.9% +100 bps

Global Ingredients 1,074.6 102.0 9.5% +11.5% +8.1% -30 bps

Dairy Ireland 652.2 15.1 2.3% +3.4% -29.1% -110 bps

Total wholly owned 2,382.1 187.7 7.9% +10.3% +10.0% No change

Joint Ventures & Associates1 900.5 39.0 4.3% +11.2% +5.3% -30 bps

Total Group 3,282.6 226.7 6.9% +10.5% +9.2% -10 bps

STRONG PERFORMANCE IN GLOBAL GROWTH PLATFORMS


SUMMARY INCOME STATEMENT

2013 results summary pre exceptional Reported currency Constant currency

€m 2013 2012 Change Change

Revenue 2,382.1 2,211.8 +7.7% +10.3%

EBITA 187.7 176.7 +6.2% +10.0%

EBITA margin 7.9% 8.0% -10bps No change

- Amortisation of intangibles (21.0) (19.9)

- Net finance costs (23.0) (20.4)

- Share of results of JV&As1 26.5 12.1

- Income tax (24.7) (25.5)

Profit for the year 145.5 123.0

Adjusted Earnings per Share2 55.46c 51.34c +8.0% +11.9%

1. Glanbia disposed of a 60% interest in GIIL in November 2012. GIIL is now a 40% associate of the Group. The share of results of JV&As figure for 2012 includes just one month of GIIL. The 11 months prior to the sale were shown in discontinued items and are not included in the table above.

2. For comparative purposes, the 2012 adjusted earnings per share have been adjusted to show GIIL as an associate for the full year.


2013 SUMMARY CASH FLOW

€m 2013 2012

EBITDA 214.6 201.5

Dividends from Joint Ventures & Associates 10.9 13.8

Working capital movement (39.9) (59.1)

Net interest and tax paid (55.8) (48.1)

Business sustaining capital expenditure (35.7) (30.1)

Other outflows (6.5) (13.2)

Free cash flow from continuing operations 87.6 64.8

Loans repaid by / (to) Joint Ventures & Associates 7.2 (3.3)

Strategic capital expenditure / acquisitions (76.5) (89.2)

Disposals 8.5 26.6

Restructuring costs (3.0) (6.5)

Equity dividends (27.9) (25.3)

Net cash flow from continuing operations (4.1) (32.9)

Cash flow from discontinued operations - 122.8

Cash flow pre currency exchange/fair value adjustments (4.1) 89.9

Currency exchange / fair value adjustments 6.3 13.8

Cash flow for the year 2.2 103.7


2013 SUMMARY BALANCE SHEET

€m 2013 2012

Property, plant and equipment 374.0 309.5

Investments 152.9 135.2

Intangible assets 454.5 473.0

Non-current receivables 9.4 16.8

Deferred tax/capital grants (75.8) (73.7)

Working capital 225.7 201.3

Retirement benefit obligations (78.0) (98.1)

Provisions (44.8) (42.8)

1,017.9 921.2

Net debt (374.4) (376.6)

Shareholders equity 643.5 544.6


JOINT VENTURES & ASSOCIATES RECONCILIATION

Joint Ventures & Associates - Reconciliation of EBITA to share of results

€m 2013 2012

EBITA of Joint Ventures & Associates 39.0 37.9

Reversal of pro-forma adjustment for GIIL1 - (14.8)

Reported EBITA 39.0 23.1

Amortisation (0.3) -

Finance costs (4.2) (5.3)

Income tax (8.0) (5.7)

Share of results as reported in the Income Statement 26.5 12.1


Glanbia plc Glanbia House Ring Road Kilkenny Ireland

Email: [email protected] Tel: +353 56 777 2200

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