Glanbia plc 2016 Full Year Results Presentation 22 February 2017 - PowerPoint PPT Presentation

Glanbia plc 2016 Full Year Results Presentation 22 February 2017 Siobhan Talbot Mark Garvey Group Managing Director Group Finance Director

Cautionary Statement

Full Year 2016 Performance Summary 87.66c Seventh consecutive year of double Adj. EPS digit growth in adjusted EPS +11.2% (cc*) +10.8% (rc*) € 305.1m EBITA Strong EBITA growth across the Group +12.5% (cc*) +12.6% (rc*) 10.7% Continued EBITA margin EBITA margin +90 bps (cc*) progression across the Group +90 bps (rc*) Free cash flow € 311.0m Strong cash conversion +21.5% • *CC denotes constant currency; RC denotes reported currency • To arrive at the Constant Currency change, the average FX rate for the current period is applied to the relevant reported result from the same period in the prior year. The average Euro US Dollar FX rate for 2016 was € 1 = $1.107 (FY 2015: € 1 = $1.109). • This presentation contains certain alternative performance measures. A detailed glossary of the key performance indicators and non-IFRS performance measures can be found in the appendix of this presentation. 2016 Full Year Results | Slide 3

Group EBITA progression Total group EBITA growth +12.8% (cc*), +12.6% (rc*) GLANBIA € 349.8m Commentary GROUP TOTAL € 310.7m € 162.6m € 135.6m GLANBIA PERFORMANCE NUTRITION € 111.8m € 106.6m GLANBIA NUTRITIONALS JVs & ASSOCIATES € 44.7m € 39.7m € 30.7m DAIRY IRELAND € 28.8m FY 2016 FY 2015 * CC denotes constant currency; RC denotes reported currency 2016 Full Year Results | Slide 4

Strategic Initiatives Proposal to sell 60% of Dairy Ireland to Glanbia Coop Proposed JV in JV&A’s Michigan Amazing Grass and Body & Fit GPN acquisitions 2016 Full Year Results | Slide 5

Proposal to sell 60% of Dairy Ireland to Glanbia Coop Key proposals Strategic rationale and timing Creates integrated Irish based business of scale – Non binding memorandum of understanding signed largest Irish dairy processor Expected consideration to plc of € 112 million for 60% Builds on the successful partnership of Glanbia plc equity interest. Pension obligations to transfer to new entity and working capital to be acquired separately and Glanbia Coop created in 2012 at completion Strategic logic to create one integrated organisation New entity to be named “Glanbia Ireland” to maximise opportunities from anticipated growth in Irish milk -Encompassing Glanbia Ingredients Ireland, Consumer Products and Agribusiness Investing € 250 - € 300 million in strategic investment projects to 2020 for future growth largely funded by Ownership of Glanbia Ireland JV bank debt 60% Glanbia Coop 40% Glanbia plc 2016 Full Year Results | Slide 6

New Development Project - Joint Venture 50/50 JV in Michigan • Advanced discussions with three major Michigan Co-ops • Commissioning expected in late 2019 • Development will help Glanbia to maintain leadership position in US Cheese and advanced technology whey • Project cost expected to be $400m to $425m with the majority of the cost to be financed through debt facilities within the JV 2016 Full Year Results | Slide 7

Acquisitions announced in 2017 • Plant-based nutrition, Greens & Super Foods • Positions GPN within high growth category • Distribution – natural, online & FDM – North America • Direct to consumer “DTC” online brand • Consumer base is largely in the Netherlands, Belgium and Germany • Providing GPN with access to the rapidly developing DTC channel 2016 Full Year Results | Slide 8

Operational Review

Glanbia Performance Nutrition Strong performance lfl branded Performance REVENUE in 2016 growth € 1,00 1,007.5m 7.5m Rev. . +2 +2.6% .6% Branded revenue growth +9.7% (cc) Growth Vol. ol. +6 +6.1% .1% +9.1% (rc) 13.6% branded revenue growth Earnings 20% Increase in EBITA EBITA margin EBITA 130 basis points margin Expansion € 16 162.6m 2.6m 16.1% 16.1% expansion +20.0% (cc) +130bps (cc) Successful launches across +19.9% (rc) +140bps (rc) Innovation the portfolio in ready-to-eat 2016 Full Year Results | Slide 10

Glanbia Nutritionals REVENUE Performance Good Performance in 2016 € 1,22 ,224.2m .2m +0.4% (cc) 4.5% EBITA growth with +0.5% (rc) Growth strong H2 EBITA € 11 111.8m 1.8m Continued growth in value- Value added Nutritional Solutions +4.5% (cc) +4.9% (rc) EBITA 30 basis points margin margin Expansion expansion 9.1% .1% +30bps (cc) Project to create one customer- +30bps (rc) facing organisation complete 2016 Full Year Results | Slide 11

Dairy Ireland & JVA’s DAIRY IRELAND JOINT VENTURES & ASSOCIATES EBITA EBITA REVENUE EBITA margin REVENUE EBITA margin Good performance driven by value- Strong performance driven by volume added products growth Strengthening of margins as a result EBITA growth across all three strategic of cost improvements and increased Joint Ventures value-added sales 2016 Full Year Results | Slide 12

Finance Review

Summary Income Statement Seventh year of double-digit earnings growth 2016 results summary Reported currency Constant currency pre-exceptional € 'm Change 2016 2015 Change Revenue (Wholly-owned) 2,847.9 2,774.3 +2.7% +2.8% EBITA (Wholly-owned) 305.1 271.0 +12.6% +12.5% EBITA margin 10.7% 9.8% +90 bps +90 bps Amortisation of intangibles (39.7) (31.1) Net finance costs (22.8) (21.1) Share of JV&As 27.6 26.3 Income tax (43.3) (37.3) Profit for the year 226.9 207.8 +11.2% Adjusted Earnings per Share 87.66c 79.14c +10.8% 2016 Full Year Results | Slide 14

Segmental Summary Strong performance led by Glanbia Performance Nutrition FY 2016 Constant currency change € 'm Revenue EBITA Margin Revenue EBITA Margin Glanbia Performance Nutrition 1,007.5 162.6 16.1% +9.7% 20.0% +130 bps Glanbia Nutritionals 1,224.2 111.8 9.1% +0.4% 4.5% +30 bps Dairy Ireland 616.2 30.7 5.0% -2.7% 6.6% +50 bps Total wholly-owned 2,847.9 305.1 10.7% +2.8% 12.5% +90 bps 2016 Full Year Results | Slide 15

Revenue Growth by Segment Wholly owned Revenue growth +2.7% (+2.8% CC*) Million € 2,900 0.2% (0.6)% 3.2% € 2,848m € 2,850 € 2,800 € 2,774m (0.1)% € 2,750 € 2,700 € 2,650 € 2,600 FX Glanbia Glanbia Dairy FY15 FY16 Performance Nutritionals Ireland Nutrition * Constant Currency (CC) excluding the impact of FX 2016 Full Year Results | Slide 16

Revenue Growth by Segment - GPN Glanbia Performance Nutrition Revenue growth +9.1% (+9.7% CC*) Million € 1,050 9.5% € 1,007m € 1,000 5.0% (4.8)% € 950 € 923m (0.6)% € 900 € 850 € 800 € 750 FX Volume Price Acquisitions FY15 FY16 * Constant Currency (CC) excluding the impact of FX 2016 Full Year Results | Slide 17

Revenue Growth by Segment - GN Glanbia Nutritionals Revenue growth +0.5% (+0.4% CC*) Million € 1,400 3.2% (2.8)% € 1,218m € 1,224m 0.1% € 1,200 Nutritional Nutritional € 1,000 Solutions Solutions € 475m € 488m € 800 € 600 US Cheese US Cheese € 400 € 743m € 736m € 200 € 0 FY15 FY16 FY15 FX Volume Price FY16 * Constant Currency (CC) excluding the impact of FX 2016 Full Year Results | Slide 18

EBITA Progression Wholly owned EBITA growth +12.6% (+12.5% CC*) Million € 305.1m € 1.9m € 4.8m € 27.1m € 300 € 280 € 271.0m € 0.3m € 260 € 240 € 220 € 200 FX Glanbia Glanbia Dairy FY15 FY16 Performance Nutritionals Ireland Nutrition * Constant Currency (CC) excluding the impact of FX 2016 Full Year Results | Slide 19

Exceptional Items Summary € 'm 2016 2015 1. Organisation redesign costs (11.4) (7.0) 2. Acquisition integration costs (3.1) (2.9) 3. Rationalisation costs (3.0) (7.8) 4. Irish defined benefit pension plans - (5.0) 5. Disposal of Joint Venture - (3.6) Total exceptional charge before tax (17.5) (26.3) Tax credit on exceptional items 2.7 2.5 Total exceptional charge (14.8) (23.8) 2016 Full Year Results | Slide 20

Cash Flow Progression Free Cash Flow +22% converting 88% of EBITDA to cash Million € (32m) € 32m € 370 € 50m € 354m € (53m) € (4m) € 14m € 320 € 311m € 305m € 270 € 256m € 220 € 170 € 153m € 120 2016 Depreciation* Working Business 2016 Net Dividends Other 2016 FCF FCF EBITA Capital Sustaining Operating Interest & from Free Cash 2015 2014 Capex Cash Flow Tax JV&A's Flow * Depreciation includes Grant Amortisation NOTE: 2016 EBITA reflects the wholly-owned business 2016 Full Year Results | Slide 21

Investment ROCE and Returns Total Capex 12.9% Strategic Capex -100bps Bus. Sustaining Capex € 124m 124m € 116m 116m € 86m € 73m € 90m 90m € 57m € 43m € 37m € 32m 2016 2015 2014 * Inclusive of estimated contingent consideration 2016 Full Year Results | Slide 22