Kepler Cheuvreux & Barclays Conferences September 2020 Group Finance Director
2 Glanbia plc | Half Year 2020 presentation Important notice 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.
DELIVERING B DELIVERI NG BET ETTE TER R NUTRIT NUTRITION ION FOR EVERY STEP OF LIFE’S JOURNEY Group Consumer Brands Value-added €1.4bn €0.7bn ingredients Performance Nutrition Dairy & non- Lifestyle dairy solutions Primary dairy €2.7bn
4 Glanbia plc | Half Year 2020 presentation Evolving market dynamics Consumers Customers Our Communities • Increased focus on health and • Acceleration in growth in • Our values came to life with wellness brands and ingredients ecommerce and decline of multiple examples of community specialty channels in GPN support across the Group • Consumers loyal to established • Retailers simplifying • Business sustainability and the brands in performance nutrition and weight management assortment and shelf space health and wellbeing of employees paramount • Disproportionate impact to certain • Strong demand for functional • Strong liquidity and cash demographics ingredients management meant no drawdowns of Governmental supports Portfolio well positioned
5 Glanbia plc | Half Year 2020 presentation Our strategy is aligned to the new environment Glanbia Glanbia Performance Group Nutritionals Nutrition • • Streamline products, prioritise Grow solutions capability across • Existing Maintain prudent capital ON and SlimFast brands key platforms deployment policy strategy • • Reorganise and optimise Expand into complementary • on track Continue JV developments route-to-market & supply chain adjacencies - Foodarom acquisition • • • Further recalibration of Maintain customer relationships with Lean into Glanbia purpose Covid-19 International business new forms of engagement to navigate crisis response • • • Deepen NA review across Support immediate customer needs Evolve longer term ways of demand & productivity for health & wellness products working to new environment
6 Glanbia plc | Half Year 2020 presentation GPN Half Year review EBITA MARGIN €19.6m 3.7% -59.1% cc -390 bps North America Performance Nutrition Revenue progression • Strong underlying branded performance in online and FDMC channels offset by weak specialty and distributor channels in Q2 1.7% North America Lifestyle (14.9%) • Pantry loading at the outset of Q2 stabilised by the end of the period. RTE* category weak but improving as the period progressed (0.7%) • Delivered volume growth overall in H1 due to a strong performance from SlimFast and Amazing Grass International €620.1m • Severe disruption to demand as a result of lockdowns €532.4m • As lockdowns eased at the end of Q2 markets began to reopen DTC • Positive volume performance and expansion in H1 with dedicated teams now servicing 10 markets HY19 FX Volume Price HY20 EBITA • International market disruption created negative operating leverage • Underlying margins in line with PY pre-Covid-19 impact *RTE – ready-to-eat Improving trends and margins into Q3
7 Glanbia plc | Half Year 2020 presentation GPN transformation focused on revenue and margin growth International Channel focus Portfolio streamlined – route-to-market Supply chain consolidation 35% of SKUs removed underway Demand and ON & SlimFast now 69% of sales NA Contract exit on track Revenue growth Brand focus management Scope increased as a result GPN reorganised of Covid-19 into 4 focus areas • Recalibration of International Supply Global footprint • chain Deepen review in NA across demand & productivity Efficiency New RTM partners in leveraging FDMC & online place in International acceleration markets SKUs and Productivity contract exit Targeting EBITA margins of 12% to 13% by 2022
8 Glanbia plc | Half Year 2020 presentation Significant position in growth channels – online and FDMC Revenue by channel Specialty Specialty 20% 14% FDMC 34% FDMC Channel HY 20 Growth* 40% Distributors FDMC +1% 12% Online +11% Distributors (46%) Specialty (41%) Distributors *Reported currency 20% Online Online 26% 34%
9 Glanbia plc | Half Year 2020 presentation GPN has a scale business in North America Revenue by market DTC DTC 7% 6% North America North America Performance Performance Market HY 20 Growth Nutrition Nutrition NA PN* (11%) 38% 37% NA Lifestyle +2% International International (33%) 21% International DTC (5%) 27% *LFL Branded North America North America Lifestyle Lifestyle 29% 35%
10 Glanbia plc | Half Year 2020 presentation Nutritional Solutions Half Year review MARGIN EBITA Non-dairy Ingredients €48.1m 12.4% • Strong underlying demand for essential micro nutrients • Some volume headwinds in ‘food -to- go’ category due to - 6.8% cc -130 bps Covid-19 Revenue progression Dairy Ingredients • Good demand for specialist dairy ingredient solutions • Negative pricing due to pass through of commodity prices Watson • Solid performance from Watson which was acquired in 3.5% February 2019 1.2% (1.8%) • Integration on track 2.0% EBITA €387.9m • Some headwinds due to lower ‘food -to- go’ customer demand €369.6m • Margins robust at 12.4%; H1 decline due to adverse product mix HY19 FX Volume Price Acquisition HY20
11 Glanbia plc | Half Year 2020 presentation Nutritional Solutions Strategy Providing the building blocks for our customers’ brands Core • Powerful trends driving end market growth Solutions in the following categories • Core solutions are essential micro nutrients and value-added protein ingredients Early Life Nutrition • Market leading positions in core solutions Clinical Performance Nutrition Nutrition • Customers range from global to regional brand owners in categories across Essential mainstream food & beverage and Micro Protein specialised nutrition and supplements Lifestyle Nutrients Ingredients Supplements Nutrition • Scaling capabilities through acquisition
12 Glanbia plc | Half Year 2020 presentation US Cheese Half Year review MARGIN EBITA €17.3m 1.9% +20.1% cc +10 bps Volumes Revenue progression • Strong volume performance driven by customers with retail end markets Pricing • Pricing volatile in Q2; pass through model 10.3% operated with suppliers Operations 6.0% • Strong operating performance across all 2.5% €916.4m plants which improved margin EBITA €768.7m • EBITA driven by revenue growth HY19 FX Volume Price HY20
13 Glanbia plc | Half Year 2020 presentation Joint Ventures Half Year review JV business model • JV business models performed robustly in period of Revenue* Share of PAT** unprecedented volatility €31.8m €453.6m Revenue • Decline driven by negative market pricing in Europe Profitability -1.4% cc +17.3% cc • All JVs delivered improved profitability New JV projects • Scale projects in Ireland and USA on track * Includes Glanbia’s share of revenue from the Glanbia Ireland and Glanbia Cheese UK Joint Ventures ** Includes Glanbia’s share of profits from the Glanbia Ireland, Glanbia Cheese UK and Southwest Cheese Joint Ventures
14 Glanbia plc | Half Year 2020 presentation Strong Cash Flow enabling investment & returns Total capex €47m €18m €29m 10.68c Capital Expenditure Interim Dividend Operating Cash Flow Dividends from JVs OCF improved by €28 Operated to plan FY20 capex expected Dividend payout across the Group million to be in the €65m to 34% throughout the crisis €75m range Targeting +80% OCF conversion for FY20
15 Glanbia plc | Half Year 2020 presentation Improving Balance Sheet Balance Sheet KPIs HY 2020 HY 2019 • Strong Balance Sheet to navigate the Covid-19 pandemic • Net debt decreased by €127m €651m €778m Net Debt on prior half year mainly due to strong cash generation Net Debt / Adj. EBITDA 1.95x 2.14x • New 11 year $175 million facility to be drawn down in December 2020 • Post-HY20 acquisition of Adj. EBIT / Net Financing Costs 9.4x 10.5x Foodarom for CAD 60m • Total committed facilities exceed €1.1 billion
16 Glanbia plc | Half Year 2020 presentation Glanbia structured well to capture opportunities Trends driving our business have grown more powerful Health and wellness Digital Our Categories of GPN sales now Protein category resilient online Brand in Producer of protein Weight management in growth performance nutrition solutions for convenient & Brand in weight nutrition category in US Immune enhancing ingredients Now in management in and brands very ‘on - trend’ markets + hosting the US Essential micro ON DTC websites nutrients ingredients Reduced ‘food -to-go ’ demand ON & SlimFast supplier Globally Food staples demand strong of GPN sales
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