GLANBIA CAGE CONFERENCE 2014 17 March 2014 www.glanbia.com CAGE - - PowerPoint PPT Presentation

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GLANBIA CAGE CONFERENCE 2014 17 March 2014 www.glanbia.com CAGE - - PowerPoint PPT Presentation

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GLANBIA CAGE CONFERENCE 2014 17 March 2014 www.glanbia.com CAGE 2014 www.glanbia.com 1 CAUTIONARY STATEMENT This presentation contains forward-looking statements. These statements have been made by the Directors in good faith based on the

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www.glanbia.com

GLANBIA

17 March 2014

CAGE CONFERENCE 2014

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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.

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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+

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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

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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

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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
  • nline 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

  • ur solutions into multiple nutrition categories,

channels and formats.

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GLOBAL PERFORMANCE NUTRITION

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OUR BRANDS

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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

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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

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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

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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

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GLOBAL INGREDIENTS

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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

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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
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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
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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
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STRATEGY OVERVIEW

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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

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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 GLOBAL PERFORMANCE NUTRITION

  • 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

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FINANCE OVERVIEW

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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%

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

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GLOBAL PERFORMANCE NUTRITION Cost: €50 million Commissioning: Q2 2014 (Phase 1) INGREDIENT TECHNOLOGIES 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

GLOBAL PERFORMANCE NUTRITION Cost: $315 million Acquisition date: 2008 GLOBAL PERFORMANCE NUTRITION Cost: $144 million Acquisition date: 2011 INGREDIENT TECHNOLOGIES Cost: $60 million Acquisition date: 2012 ASEPTIC SOLUTIONS OPTIMUM NUTRITION BSN

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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

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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

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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

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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 Global Performance Nutrition Global Ingredients 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 Global Performance Nutrition Global Ingredients Dairy Ireland JV&As FX FY13

TOTAL GROUP EBITA GROWTH +9.2%*

* Constant currency

€m €m

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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

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Q&A

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APPENDIX

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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

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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.

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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

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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

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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

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Glanbia plc Glanbia House Ring Road Kilkenny Ireland Email: ir@glanbia.ie Tel: +353 56 777 2200