Consumer Staples Conference Group Finance Director 2 Glanbia plc - - PowerPoint PPT Presentation

Barclays Global Consumer Staples Conference

Group Finance Director

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.

Important notice

Consumer Brands Value-added ingredients Group Dairy & non- dairy solutions

Primary dairy

DELIVERI DELIVERING B NG BET ETTE TER R NUTRIT NUTRITION ION FOR EVERY STEP OF LIFE’S JOURNEY Performance Nutrition Lifestyle

€1.4bn €0.7bn €2.7bn

Evolving market dynamics

Customers Consumers Our Communities

• Increased focus on health and

wellness brands and ingredients

• Consumers loyal to established

brands in performance nutrition and weight management

• Disproportionate impact to certain

demographics

• Acceleration in growth in

ecommerce and decline of specialty channels in GPN

• Retailers simplifying

assortment and shelf space

• Strong demand for functional

ingredients

• Our values came to life with

multiple examples of community support across the Group

• Business sustainability and the

health and wellbeing of employees paramount

• Strong liquidity and cash

management meant no drawdowns of Governmental supports

Portfolio well positioned

Our strategy is aligned to the new environment

Glanbia Performance Nutrition Glanbia Nutritionals Group

• Streamline products, prioritise

ON and SlimFast brands

• Reorganise and optimise

route-to-market & supply chain

• Grow solutions capability across

key platforms

• Expand into complementary

adjacencies - Foodarom acquisition

• Maintain prudent capital

deployment policy

• Continue JV developments
• Lean into Glanbia purpose

to navigate crisis

• Evolve longer term ways of

working to new environment

• Maintain customer relationships with

new forms of engagement

• Support immediate customer needs

for health & wellness products

• Further recalibration of

International business

• Deepen NA review across

demand & productivity

Existing strategy

• n track

Covid-19 response

€620.1m 1.7% (14.9%) (0.7%) €532.4m

HY19 FX Volume Price HY20

Revenue progression

North America Performance Nutrition

• Strong underlying branded performance in online and FDMC

channels offset by weak specialty and distributor channels in Q2

North America Lifestyle

• Pantry loading at the outset of Q2 stabilised by the end of the
• period. RTE* category weak but improving as the period progressed
• Delivered volume growth overall in H1 due to a strong performance

from SlimFast and Amazing Grass

International

• Severe disruption to demand as a result of lockdowns
• 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

EBITA

• International market disruption created negative operating leverage
• Underlying margins in line with PY pre-Covid-19 impact

GPN Half Year review

• 59.1% cc

€19.6m

EBITA

• 390 bps

3.7%

MARGIN

Improving trends and margins into Q3

GPN transformation focused on revenue and margin growth

International route-to-market Revenue growth management Channel focus Brand focus Supply chain Productivity Global footprint SKUs and contract exit

Demand Efficiency

Portfolio streamlined – 35% of SKUs removed and ON & SlimFast now 69% of sales GPN reorganised into 4 focus areas New RTM partners in place in International markets NA Contract exit on track Scope increased as a result

• f Covid-19
• Recalibration of International
• Deepen review in NA across

demand & productivity leveraging FDMC & online acceleration

Supply chain consolidation underway

Targeting EBITA margins of 12% to 13% by 2022

Significant position in growth channels – online and FDMC

Revenue by channel

FDMC 34% Online 26% Distributors 20% Specialty 20% FDMC 40% Online 34% Distributors 12% Specialty 14%

Channel HY 20 Growth* FDMC +1% Online +11% Distributors (46%) Specialty (41%)

*Reported currency

North America Performance Nutrition 38% North America Lifestyle 29% International 27% DTC 6% North America Performance Nutrition 37% North America Lifestyle 35% International 21% DTC 7%

GPN has a scale business in North America

Market HY 20 Growth NA PN* (11%) NA Lifestyle +2% International (33%) DTC (5%)

*LFL Branded

Revenue by market

€369.6m 2.0% 1.2% (1.8%) 3.5% €387.9m

HY19 FX Volume Price Acquisition HY20

Revenue progression Non-dairy Ingredients

• Strong underlying demand for essential micro nutrients
• Some volume headwinds in ‘food-to-go’ category due to

Covid-19

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

February 2019

• Integration on track

EBITA

• Some headwinds due to lower ‘food-to-go’ customer

demand

• Margins robust at 12.4%; H1 decline due to adverse

product mix

Nutritional Solutions Half Year review

• 6.8% cc

€48.1m

EBITA

• 130 bps

12.4%

MARGIN

Essential Micro Nutrients

• Powerful trends driving end market growth
• Core solutions are essential micro nutrients

and value-added protein ingredients

• Market leading positions in core solutions
• Customers range from global to regional

brand owners in categories across mainstream food & beverage and specialised nutrition and supplements

• Scaling capabilities through acquisition

Nutritional Solutions Strategy

Core Solutions Providing the building blocks for our customers’ brands in the following categories

Supplements Clinical Nutrition Early Life Nutrition Performance Nutrition Lifestyle Nutrition

Protein Ingredients

€768.7m 2.5% 6.0% 10.3% €916.4m

HY19 FX Volume Price HY20

Revenue progression

US Cheese Half Year review

+20.1% cc

€17.3m

EBITA +10 bps

1.9%

MARGIN

Volumes

• Strong volume performance driven by

customers with retail end markets

Pricing

• Pricing volatile in Q2; pass through model
• perated with suppliers

Operations

• Strong operating performance across all

plants which improved margin

EBITA

• EBITA driven by revenue growth

Joint Ventures Half Year review

• 1.4% cc

€453.6m

Revenue*

+17.3% cc

€31.8m

Share of PAT**

JV business model

• JV business models performed robustly in period of

unprecedented volatility

Revenue

• Decline driven by negative market pricing in Europe

Profitability

• All JVs delivered improved profitability

New JV projects

• Scale projects in Ireland and USA on track

Strong Cash Flow enabling investment & returns

€47m

OCF improved by €28 million Operated to plan across the Group throughout the crisis FY20 capex expected to be in the €65m to €75m range

€18m

Total capex

€29m

10.68c

Operating Cash Flow Dividends from JVs Capital Expenditure Interim Dividend Targeting +80% OCF conversion for FY20 Dividend payout 34%

Improving Balance Sheet

• Strong Balance Sheet to navigate

the Covid-19 pandemic

• Net debt decreased by €127m
• n prior half year mainly due

to strong cash generation

• New 11 year $175 million facility to

be drawn down in December 2020

• Post-HY20 acquisition of

Foodarom for CAD 60m

• Total committed facilities exceed

€1.1 billion

Balance Sheet KPIs HY 2020 HY 2019

Net Debt €651m €778m

Net Debt / Adj. EBITDA 1.95x 2.14x

• Adj. EBIT / Net Financing Costs

9.4x 10.5x

Glanbia structured well to capture opportunities

Trends driving our business have grown more powerful

Health and wellness Digital Our Categories

Brand in performance nutrition & Brand in weight management in the US ON & SlimFast

• f GPN sales
• f GPN sales now
• nline

Producer of protein solutions for convenient nutrition category in US Essential micro nutrients ingredients supplier Globally Protein category resilient Weight management in growth Immune enhancing ingredients and brands very ‘on-trend’ Reduced ‘food-to-go’ demand Food staples demand strong

Now in markets + hosting ON DTC websites

Questions

APPENDIX

Segmental Analysis

€’m Reported currency Constant currency

Glanbia Performance Nutrition

HY 2020 HY 2019 HY 2019 Growth %

Revenue 532.4 620.1 630.6

• 15.6%

EBITA 19.6 46.9 47.9

• 59.1%

EBITA margin 3.7% 7.6% 7.6%

• 390 bps

€’m Reported currency Constant currency

Glanbia Nutritionals

HY 2020 HY 2019 HY 2019 Growth %

Revenue* 1,304.3 1,138.3 1,165.0 12.0% EBITA 65.4 64.5 66.0

• 0.9%

EBITA margin 5.0% 5.7% 5.7%

• 70 bps

*As a result of the adoption of IFRS 15 in 2019, Revenue in Glanbia Nutritionals includes 100% of revenue from the Southwest Cheese joint venture. All comparisons are on a like-for-like basis

Segmental Analysis

€'m Reported currency Constant currency

Nutritional Solutions

HY 2020 HY 2019 HY 2019 Growth %

Revenue* 387.9 369.6 376.9 2.9% EBITA 48.1 50.5 51.6

• 6.8%

EBITA margin 12.4% 13.7% 13.7%

• 130 bps

€'m Reported currency Constant currency

US Cheese

HY 2020 HY 2019 HY 2019 Growth %

Revenue* 916.4 768.7 788.1 16.3% EBITA 17.3 14.0 14.4 20.1% EBITA margin 1.9% 1.8% 1.8% +10 bps

*As a result of the adoption of IFRS 15 in 2019, Revenue in Glanbia Nutritionals (Nutritional Solutions & US Cheese) includes 100% of revenue from the Southwest Cheese joint venture. All comparisons are on a like-for-like basis

Segmental Analysis

€'m Reported currency Constant currency

Revenue

HY 2020 HY 2019 HY 2019 Growth %

Glanbia Performance Nutrition 532.4 620.1 630.6

• 15.6%

Nutritional Solutions 387.9 369.6 376.9 2.9% US Cheese 916.4 768.7 788.1 16.3% Glanbia Nutritionals* 1,304.3 1,138.3 1,165.0 12.0% Wholly-owned Revenue 1,836.7 1,758.4 1,795.6 2.3%

*As a result of the adoption of IFRS 15 in 2019, Revenue in Glanbia Nutritionals includes 100% of revenue from the Southwest Cheese joint venture. All comparisons are on a like-for-like basis

Segmental Analysis

€'m Reported currency Constant currency EBITA HY 2020 HY 2019 HY 2019 Growth %

Glanbia Performance Nutrition 19.6 46.9 47.9

• 59.1%

Nutritional Solutions 48.1 50.5 51.6

• 6.8%

US Cheese 17.3 14.0 14.4 20.1% Glanbia Nutritionals 65.4 64.5 66.0

• 0.9%

Wholly-owned EBITA 85.0 111.4 113.9

• 25.4%