glanbia plc - 13 march 2013/media/files/g/glanbia-plc/...13 march 2013 2012 full year results 2012...

011 Full Year Results

13 March 2013

2012 Full year results

Full Year Results

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.


2012 results highlights

Leading global nutritionals solutions and cheese group

Full Year Results

2012 adjusted earnings per share

Record results with strong growth in adjusted earnings per share

Results ahead of market expectations driven by Global Nutritionals

Third consecutive year of double digit growth

Reported currency

adjusted EPS

56.56c

+22.1%

Constant currency

adjusted EPS

52.90c

+14.2%

Full Year Results

2012 performance summary

Pro forma Total

Group EBITA

margin*

€214m

+17.5%

Pro forma Total

Group EBITA

margin*

7.0%

+40bps

Strong growth in revenue, EBITA and margins

20% like for like revenue growth in Global Nutritionals and good operational performances across the business

Consistent macro health and wellness trends driving demand for protein, natural products and clean labelling; all key Glanbia strengths

Historic year for corporate development

10% dividend increase bringing total dividend for the year to 9.09 cents

Wholly owned

EBITA margin*

8.0%

+70bps

Pro forma JV &

Associates EBITA

margin*

4.6%

-30bps

Pro forma Total

Group revenue*

€3.0bn

+10.4%

* Metrics for the Total Group include both the wholly owned businesses and the Group’s share of joint venture’s and associates. To better reflect the structure of the Group going forward, a pro forma adjustment has been made to include GIIL as a 40% associate for each of 2012 and 2011.

All figures are in reported currency

Full Year Results

Historic year for corporate development

• Disposal to Glanbia Co-operative Society (the “Society”) of 60% of our interest in Irish dairy processing business, Dairy Ingredients Ireland.

• Clarifies strategy with regard to expansion of Irish dairy processing capacity and capital allocation.

• Reduces the Group’s exposure to volatility in global dairy markets.

• New entity is called Glanbia Ingredients Ireland Limited (“GIIL”).

• GIIL is run by existing management, has a separate board and is financed on a standalone basis.

100% owned

subsidiary40% owned

associateGlanbia plc

US Cheese

& Global

NutritionalsDairy Ireland

Dairy

Ingredients

Ireland

Consumer

Products

Agribusiness

US Cheese

Ingredient

Technologies

Performance

Nutrition

Customised

Premix

Solutions

Joint Ventures

& Associates

Nutricima

Glanbia

Ingredients

Ireland

Southwest

Cheese

(USA)

Glanbia

Cheese

(UK)

Full Year Results

Group profile going forward

• Transforms Group profile with US

Cheese and Global Nutritionals now

representing 73% of Total Group

EBITA.

• Total Group EBITA margin increases

60 basis points.

2011 Total Group2012 pro forma

Total Group

Revenue

EBITA

EBITA margin

6.4% 7.0%

60%

12%

28%

42%

17%

41%

73%

18%

9%

21%

27%

52%

US CHEESE AND GLOBAL NUTRITIONALS

DAIRY IRELAND

JOINT VENTURES AND ASSOCIATES

All figures are in reported currency. 2012 pro forma figures include GIIL as a 40% associate from January 1, 2012.


2012 finance and operations review

Largest sports nutrition brand family globally

Full Year Results

2012 results summary

Pre exceptional1 Constant currency Reported currency

2012 Change 2012 Change

Wholly owned businesses

Revenue €2,092.4m + 8.3% €2,211.8m + 14.4%

EBITA €162.6m + 15.1% €175.9m + 24.5%

EBITA margin 7.8% + 50bps 8.0% + 70bps

Pro forma Joint Ventures & Associates2

Revenue €792.5m - 3.3% €826.3m + 0.8%

EBITA €36.2m - 10.6% €37.7m - 6.9%

EBITA margin 4.6% - 30bps 4.6% - 30bps

Pro forma Total Group

Revenue €2,884.9m +4.8% €3,038.1m + 10.4%

EBITA €198.8m + 9.4% €213.6m +17.5%

EBITA margin 6.9% +30bps 7.0% +40bps

1. Figures are pre exceptional items which in 2012 amounted to a charge of €4.7 million (2011: €7.6 million).

2. Includes pro forma adjustments reflecting GIIL as a 40% associate from January 2011.

Full Year Results

2,752

59

7412

14 12 2,885

-30

2,600

2,650

2,700

2,750

2,800

2,850

2,900

2,950

2011 Price Volume Acquisitions Price Volume Price Volume 2012

Dairy Ireland JV&AUSCGN€m

2012 Total Group revenue and EBITA analysis

All figures shown are on a constant currency basis

US CHEESE AND GLOBAL NUTRITIONALS

DAIRY IRELAND

JOINT VENTURES AND ASSOCIATES

0

50

100

150

200

250

2011 US Cheese & Global Nutritionals Dairy Ireland Joint Ventures & Associates 2012

18225 199-4-4

€m

Total Group EBITA +9.4%

Total Group revenue +4.8%

Full Year Results

• Strong performance overall and continued momentum across Global Nutritionals business units

• Aseptic Solutions, acquired July 2012, performed in line with expectations

• Largest segment of the Group:

• 52% pro forma Total Group revenue

• 73% pro forma Total Group EBITA

US Cheese & Global Nutritionals

Constant currency Reported

2012 2011 Change 2012 Change

Revenue €1,461.4m €1,316.9m + 11.0% €1,580.8m + 20.0%

EBITA €142.2m €117.5m + 21.0% €155.5m + 32.3%

EBITA margin 9.7% 8.9% + 80 bps 9.8% + 90bps

Revenue

EBITA

EBITA margin

Full Year Results

US Cheese & Global Nutritionals (continued)

US Cheese Ingredient Technologies Performance Nutrition

2012 overview:

• Revenue decline price

related. Low single digit

volume growth.

• Average cheese prices

lower but business

increasingly insulated

from price movements.

• Modest decline in EBITA

and margins flat.

2013 outlook:

• Expected to be in line

with 2012.

• Renewed innovation

focus

2012 overview:

• Strong performance due

to significant whey price

increases and strong

demand for functional

and nutritional solutions.

• Revenue, EBITA and

margins all higher.

• Ongoing innovation and

award-winning NPD.

2013 outlook:

• Forecast lower whey

pricing is expected to

impact revenue and

margins.

• Continued development

of Functional &

Nutritional Solutions

Customised Premix

Solutions

2012 overview:

• Strong growth with

global branded revenue

up 20%. Positive EBITA

growth also.

• Higher whey input costs

and ongoing investment

in building the business

globally resulted in a

modest decline in

margins.

2013 outlook:

• Favourable outlook with

further volume growth

and market penetration.

• Input cost pressures

expected to moderate in

2013.

2012 overview:

• Strong volume growth,

increased revenue and

EBITA.

• Modest decline in

margins due to change

in business mix and

investment in the

business.

2013 outlook:

• Continued growth

forecast in key market

segments such as infant

formula, supplements

and nutritional bars.

• Positive outlook for the

full year performance.

Positive market trends Ongoing investment in businesses

Full Year Results

Dairy Ireland

Continuing business 2012 2011 Change

Revenue €631.0m €616.0m 2.4%

EBITA €20.4m €23.8m - 14.3%

EBITA margin 3.2% 3.9% - 70bps

Consumer Products Agribusiness

• 2012: Satisfactory performance in

tough market conditions.

• 2013 outlook: Irish food retail market

expected to remain challenging.

• 2012: Revenue growth but lower

EBITA and margins.

• 2013 outlook: Expected to perform

broadly in line with 2012.

Revenue

EBITA

EBITA margin

Full Year Results

Joint Ventures and Associates

Constant currency Reported

Pro forma 2012 2011 Change 2012 Change

Revenue €792.5m €819.5m - 3.3% €826.3m + 0.8%

EBITA €36.2m €40.5m - 10.6% €37.7m - 6.9%

EBITA margin 4.6% 4.9% - 30bps 4.6% - 30bps

Glanbia Ingredients

Ireland Limited

Southwest Cheese

(USA)

Glanbia Cheese

(UK)

• 2012: Somewhat lower

revenue and EBITA

reflecting global dairy

market conditions.

• 2013 outlook: Expected

to be in line with 2012.

• 2012: Revenue up

marginally and some

improvement in EBITA

and margins.


to be in line with 2012.

• 2012: Decline in

performance relative to a

very strong prior year.

• 2013 outlook: Improved

performance expected.

Nutricima

(Nigeria)

• 2012: Social unrest

created a difficult market

environment. Revenue

was lower but EBITA

and margins stable.


to remain challenging.

Revenue

EBITA

EBITA margin

Full Year Results

Group financing

Preference shares

(€39.1m)

Bank facilities

(€467.9m)

Private debt placement

($325.0m)

• €60.4 million free cash flow from continuing operations

• €376.6 million net debt at the end of the year

• Current committed debt facilities of €753.5 million:

o €39.1 million of preference shares redemption due 2014

o €467.9 million facilities renewed in 2012 maturing in 2018

o €246.5 million ($325 million) private placement maturing 2021

1. Includes cumulative redeemable preference shares.

2. The definitions of adjusted EBITDA and adjusted EBIT are per our financing agreements and include dividends from Joint Ventures & Associates.

Financing KPIs 2012 2011

Net debt1 / Adjusted EBITDA2 1.7 times 2.1 times

Adjusted EBIT2 : net finance cost 8.1 times 6.3 times

Return on capital employed 14.1% 12.8%

Full Year Results

Adjusted earnings per share

Constant currency Reported currency

2012 Change 2012 Change

Adjusted earnings per share 52.90c +14.2% 56.56c +22.1%

- Continuing operations 47.36c +17.4% 51.02c +26.5%

- Discontinued operations 5.54c -7.4% 5.54c -7.4%

• Strong adjusted earnings per share growth in continuing operations in 2012

• GIIL transaction has a short-term dilutive effect in earnings

• Adjusted earnings per share growth is expected to be 8% to 10% for 2013 from a base of 51.02

cents per share


Strategy

Leading producer of American-style cheddar cheese

Full Year Results

Vision and strategy

Align with

key growth

customers and

markets

To be the leading

global nutritional

solutions and

cheese group

Strategic priorities

Align with key growth

customers and markets

Develop customer-focused,

market-based and science-

backed innovation

Deliver organic and

acquisition investments that

maximise return on capital

Achieve operational

excellence and disciplined

cost management

Foster a strong

multi-disciplined team

focused on success

Business focus

areas

Long term3 years12 months

Derived from our

strategic priorities.

They help to ensure

our near term goals

are consistent with

our delivery of long

term performance

Our vision

Full Year Results

Key corporate development projects

Irish dairy processing

• 40% : 60% partnership

• €21m value-added whey

processing expansion

Ingredient

Technologies:

• $60m nutritionals

acquisition of US

beverage

manufacturer and

co-packer

• $29m new value-

added cereal

ingredients plant,

completion H2 2013

US Cheese:

• $11m cheese

innovation centre,

completion H1

2013

Customised Premix

Solutions:

• €20m new state-of-the-

art plant in Germany to

serve Europe, Middle

East and North Africa

Performance Nutrition:

• Exciting new product launches

• SAP rollout 2013

• $45m capacity expansion,

completion 2014

2012

• €115m invested

• 14.1% ROCE

Full Year Results

2013 business focus areas

US Cheese

• Enhance new product development and export platforms with the new US Cheese innovation centre

Global Nutritionals

• Deliver organic growth targets within the 3 Global Nutritionals businesses

• Continue expansion of Performance Nutrition and Customised Premix Solutions into international markets

Joint Ventures & Associates

• Manage the transition of GIIL from wholly owned to an associate in strategic partnership with the Society

• Reach final decision on the potential development of lactose capacity in Southwest Cheese

Group-level

• Develop and evaluate acquisition pipeline; capacity to spend c.€200 million

• Successfully execute all capital investment projects

• Continue to build organisational capability – people and infrastructure for next phase of growth

Full Year Results

Unique business with clear competitive advantage

• World class, large scale

cheese and whey

manufacturing

• Value-added functional

ingredients and

solutions

• Largest sports nutrition

brand family globally

• Proven organic and

acquisition ability

Global Ingredients Performance Nutrition

Ongoing investment in organisational capability

Strong balance sheet and financial capacity

Sustainable demand growth and positive structural market trends


Summary and outlook

Global provider of micro-nutrient premixes

Global marketer of whey and other proteins

Full Year Results

Summary and outlook

• GIIL transaction transforms profile of the business

• Well defined strategy with strong organic investment

programme and clear business focus areas for 2013

• Global Nutritionals growth underpinned by favourable

market trends, operational excellence and ongoing

focus on innovation

• Overall outlook positive

2013 adjusted EPS growth of 8% to 10%,

on a constant currency basis from 51.02c


Supplementary information

No.1 dairy processor in Ireland

No.1 mozzarella producer in Europe

No.3 consumer dairy products provider in Nigeria

Full Year Results

2012 segmental overview – constant currency

1. Includes pro forma adjustments presenting GIIL as a 40% associate from January 2011.

Pre exceptional

2012 2011

€m Revenue EBITA EBITA % Revenue EBITA EBITA %

US Cheese & Global Nutritionals 1,461.4 142.2 9.7% 1,316.9 117.5 8.9%

Dairy Ireland 631.0 20.4 3.2% 616.0 23.8 3.9%

Total Wholly owned businesses 2,092.4 162.6 7.8% 1,932.9 141.3 7.3%

Pro forma Joint Ventures & Associates1 792.5 36.2 4.6% 819.5 40.5 4.9%

Pro forma Total Group 2,884.9 198.8 6.9% 2,752.4 181.8 6.6%

Full Year Results

2012 segmental overview – reported currency

Pre exceptional

2012 2011

€m Revenue EBITA EBITA % Revenue EBITA EBITA %

US Cheese & Global Nutritionals 1,580.8 155.5 9.8% 1,316.9 117.5 8.9%

Dairy Ireland 631.0 20.4 3.2% 616.0 23.8 3.9%

Total Wholly owned businesses 2,211.8 175.9 8.0% 1,932.9 141.3 7.3%

Pro forma Joint Ventures & Associates1 826.3 37.7 4.6% 819.5 40.5 4.9%

Pro forma Total Group 3,038.1 213.6 7.0% 2,752.4 181.8 6.6%

1. Includes pro forma adjustments presenting GIIL as a 40% associate from January 2011.

Full Year Results

2012 summary cash flow

€m 2012 2011

EBITDA 200.6 163.6

Dividends from Joint Ventures & Associates 13.8 14.8

Working capital movement (59.1) (13.3)

Net interest and tax paid (48.1) (31.8)

Business sustaining capital expenditure (30.1) (27.3)

Other outflows (16.7) (19.2)

Free cash flow from continuing operations 60.4 86.8

Loans advanced to Joint Ventures & Associates (3.3) -

Strategic acquisitions/capital expenditure (84.8) (128.1)

Disposals 27.1 2.7

Restructuring costs (6.5) (10.0)

Equity dividends (25.3) (22.9)

Net cash outflow from continuing operations (32.4) (71.5)

Cash flow re discontinued operations 122.3 6.1

Cash flow pre currency exchange/fair value adjustments 89.9 (65.4)

Currency exchange/fair value adjustments 13.8 (6.8)

Cash flow/(cash outflow) for the year 103.7 (72.2)

Full Year Results

2012 summary balance sheet

€m 2012 2011

Property, plant and equipment 309.5 394.6

Investments 135.2 81.8

Intangible assets 473.0 467.3

Non-current receivables 16.8 14.6

Deferred tax/capital grants (73.7) (99.4)

Working capital 201.3 232.8

Retirement benefit obligations (98.1) (48.4)

Provisions (42.8) (40.0)

921.2 1,003.3

Net debt (376.6) (480.3)

Shareholders’ equity 544.6 523.0

Full Year Results

2012 exceptional items

€m 2012

1. Sale of Yoplait franchise 6.1

2. Rationalisation costs (3.8)

3. Flax processing facility 4.4

4. Property write down (5.1)

5. 60% disposal of GIIL (7.8)

6. Taxation credit 1.5

Total exceptional charge (4.7)

1. May 2012 disposal of Yoplait franchise for consideration of €18 million gave rise to a gain of €6.1 million.

2. Ongoing cost reduction programme in Dairy Ireland resulted in further rationalisation costs of €3.8 million.

3. March 2012, a fire destroyed Ingredient Technologies’ Canadian flax facility. Gain of €4.4 million represents minimum

insurance proceeds receivable less book value of assets written down.

4. Review of carrying value of Irish property portfolio resulted in a write down of €5.1 million.

5. Loss of €7.8 million incurred on disposal of 60% of Dairy Ingredients Ireland.

6. The tax credit applicable to the exceptional items (1 to 4 above) amounted to €1.5 million.


Glanbia plc, Glanbia House, Kilkenny, Ireland

Tel: +353 56 7772244

2012 Full year results

www.glanbia.comd

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