TIDMGLB
RNS Number : 3848K
Glanbia PLC
05 May 2022
FIRST QUARTER 2022 INTERIM MANAGEMENT STATEMENT
Glanbia reports a strong Q1, FY 22 guidance raised
05 May 2022 - Glanbia plc, the global nutrition group
("Glanbia", the 'Group', "plc" or the 'Company'), is issuing this
Interim Management Statement for the three month period ended 2
April 2022 ("first quarter" or "Q1 2022" or "Q1"). This statement
is issued in conjunction with the plc's Annual General Meeting
("AGM") which is being held today.
Summary
-- Q1 2022 wholly-owned revenues up 25.0% on a constant currency
basis (up 33.5% reported) versus prior year due to good demand
across both Glanbia Performance Nutrition ("GPN") and Glanbia
Nutritionals ("GN");
-- Significant action taken across the Group to mitigate
inflation with pricing increased by 17.0% and volume growth
sustained at 6.9%;
-- Q1 like-for-like(1) ("LFL") wholly-owned revenue growth of 23.9% versus prior year;
-- GPN delivered LFL revenue growth in Q1 2022 of 14.7% on a
constant currency basis driven by pricing actions and strong demand
in sports nutrition, healthy snacking and plant based products;
-- GN Nutritional Solutions ("NS") delivered LFL revenue growth
in Q1 2022 of 19.0% on a constant currency basis driven by pricing
and strong customer demand in micro-nutrients;
-- NS acquired Sterling Technology, a US bioactive ingredient
company focused on immunity solutions, for $60 million plus
deferred consideration;
-- Glanbia Ireland disposal closed during Q1;
-- Net debt at the end of Q1 2022 of EUR552.3 million, (Q1 2021,
EUR498.5 million) with significant borrowing capacity on balance
sheet; and
-- Following a strong first quarter, Glanbia is raising guidance
and now expects to deliver 5% to 10% growth in adjusted EPS on a
constant currency basis.
Commenting today, Siobhán Talbot, Group Managing Director
said:
"I am pleased to announce a strong 2022 first quarter
performance for Glanbia. Glanbia continues to grow as a focused,
purpose-led global nutrition company serving powerful consumer
health and wellness trends. This strategy underpins our growth,
which continued in first quarter of 2022 with revenues up 25.0%, on
a constant currency basis, versus prior year. Inflation remains a
key dynamic for Glanbia and we have taken significant mitigating
actions across the Group by increasing prices by 17.0% in the first
quarter and delivering volume growth of 6.9% while managing our
cost base prudently. The GPN consumer branded business has
performed well delivering volume growth across performance
nutrition, healthy snacking and plant based brands as consumer
demand for our brands remains robust. Our NS ingredients business
delivered an excellent quarter as customer demand across
micro-nutrients in particular remains strong.
We have maintained momentum on our strategic agenda in the
period by completing the disposal of our interest in the Glanbia
Ireland joint venture as well as acquiring Sterling Technology, a
bioactive ingredient company, which builds on our offering in
immunity solutions in NS. To-date in 2022 we have also invested
EUR123.4 million in share buybacks.
The strong first quarter gives us confidence for the remainder
of the year and we have raised our expectations for full year 2022,
and now expect to deliver between 5% to 10% growth in adjusted EPS
on a constant currency basis."
Summary revenue progression
Summary of Q1 2022 revenue progression
versus Q1 2021
Reported
Constant currency movement movement
=========================================================
Total
constant Total
Volume Price Like-for-like Acquisition currency reported
======= ==========
Glanbia Performance
Nutrition 1.7% 13.0% 14.7% 1.0% 15.7% 22.8%
----------------------- ------- ------ -------------- ------------ ---------- ----------
Glanbia Nutritionals 9.4% 18.8% 28.2% 1.1% 29.3% 38.3%
----------------------- ------- ------ -------------- ------------ ---------- ----------
Nutritional Solutions 4.2% 14.8% 19.0% 3.4% 22.4% 29.9%
US Cheese 11.7% 20.7% 32.4% - 32.4% 42.2%
----------------------- ------- ------ -------------- ------------ ---------- ----------
Total wholly-owned
businesses 6.9% 17.0% 23.9% 1.1% 25.0% 33.5%
======================= ======= ====== ============== ============ ========== ==========
In the three months ended 2 April 2022 compared to the same
period in 2021, wholly-owned revenue increased 25.0%, constant
currency. On a reported basis, reflecting the stronger Euro US
Dollar foreign exchange rate(2) , revenue increased 33.5%. The
drivers of the revenue increase, on a constant currency basis was
volume growth of 6.9%, price increase of 17.0% and acquisitions
representing 1.1%. Volume was positive across all segments as
demand in the Group's end markets remains robust. The Group has
been proactively raising prices materially across its portfolio of
brands and ingredients to counteract cost inflation in raw
materials in particular. Acquisitions remain a core strategy for
the Group with the PacMoore and LevlUp acquisitions in GN and GPN
respectively contributing to growth in the period.
Outlook
Glanbia is successfully growing revenue year to-date despite a
number of significant risks including inflation, geopolitical
tensions and continued Covid related supply chain disruption,
particularly in Asia.
In the absence of any further major market disruption, the
strong start to 2022 provides increasing confidence in the Group's
ability to stay close to the nutrition needs of consumers and
navigate external challenges. Glanbia is now confident to raise its
outlook and for full year 2022, GPN expects to deliver double digit
revenue growth while GN NS expects strong double digit revenue
growth. Revenue growth in both platforms will be primarily driven
by pricing as previously noted.
EBITA growth is expected to be delivered in both GPN and GN NS
for FY 2022.
Full year expectations for US Cheese and JVs are unchanged from
prior views.
As previously outlined, some full year margin contraction is
expected in GPN, due to the lag effect of inflation and pricing
action. In GN NS full year margin contraction will be driven by the
mathematical dilution of significant top line pricing changes
particularly in dairy ingredients.
From a Group perspective, the strong focus on cash generation is
expected to deliver an operating cash flow conversion rate of over
80% in 2022.
The Group now expects to deliver 5% to 10% growth in adjusted
EPS on a constant currency basis. Based on current foreign exchange
rates the reported adjusted EPS result is expected to be 10% higher
than the constant currency basis.
Glanbia Performance Nutrition (all commentary is on a constant
currency basis(2) )
GPN delivered revenue growth of 15.7% in the first quarter of
2022 compared to the prior year. This was a strong performance in
the context of the prior year comparative and was driven by a price
increase of 13.0%, a volume increase of 1.7% and the LevlUp
acquisition adding 1.0%. Branded revenue for the first quarter grew
on a like-for-like basis by 16.7% with 13.4% growth in pricing and
volume growth of 3.3%.
Volume performance was driven by good growth in performance
nutrition, healthy snacking and plant based categories offset by
declines in the diet category. Price improvement was driven by the
impact of price increases which were implemented in the third
quarter of 2021 and in the first quarter of 2022.
Americas
GPN Americas delivered 13.8% revenue growth in the first quarter
of 2022. This was driven by a good performance in sports nutrition,
healthy snacking and plant based categories with key brands in
these categories delivering good volume growth. The majority of
price increase was focused on these categories and the consumer
response has been positive with strong consumption trends
continuing into the second quarter.
Consumers remain focused on returning to healthy lifestyles as
well as making healthy choices in their everyday nutrition and this
continues to be a powerful driver of demand across the portfolio
and in particular for the ON, think!, Isopure and Amazing Grass
brands.
The diet category continued to experience headwinds during the
key first quarter and this impacted consumption trends and revenue
performance for the SlimFast brand. Informed by consumer research,
GPN is in the process of broadening the brand appeal of SlimFast
from diet into weight management, a refresh that will be supported
by new brand and pack design, new creative content and new
innovation in the second half of the year.
International
GPN International delivered 20.1% revenue growth in the first
quarter with both volume and price growth as well as the LevlUp
acquisition.
Demand and consumption trends in the first quarter across key
international markets has remained robust across performance
nutrition categories. Pricing action to mitigate inflation has been
taken globally across the portfolio.
The European direct-to-consumer ("DTC") business has performed
well in the period delivering revenue growth as consumer demand for
performance nutrition remained robust in its core markets.
Glanbia Nutritionals (all commentary is on a constant currency
basis(2) )
GN delivered strong revenue growth in the first quarter of 2022
versus prior year. Revenue increased by 29.3% versus prior year
driven by a volume increase of 9.4%, a price increase of 18.8% and
acquisitions delivering 1.1% revenue growth.
Nutritional Solutions
NS revenue increased by 22.4% in the period. Volume growth was
good at 4.2%, pricing increased by 14.8% and acquisitions delivered
3.4% revenue growth.
Volume growth in Q1 2022 was driven primarily by a strong
performance in micro-nutrients due to strong end market demand in
immunity and mainstream food and beverage. NS has taken pricing
action across the portfolio to mitigate inflation including
pass-through pricing of dairy market inflation in the period.
Throughout Q1 there has been strong global demand from customers
oriented to health, wellbeing and immune enhancing trends as well
as mainstream food and beverage in a range of product formats. NS
expects these trends to continue in the second quarter. The
PacMoore acquisition, completed in September 2021, is performing
well. NS completed the acquisition of Sterling Technology in March
2022.
Sterling Technology acquisition
On 11 March 2022 Glanbia acquired Sterling Technology
("Sterling"), a bioactive ingredient company based in South Dakota,
USA for a purchase price of $60 million plus deferred
consideration. Sterling will complement the existing ingredient
technology portfolio of NS providing bioactive ingredients which
are mainly used in the growing immunity and gut-heath segments as
well as in pet nutrition. Sterling 2021 revenue was $23.6 million
and the acquisition is expected to be marginally accretive to
earnings in FY 2022.
US Cheese
US Cheese revenue increased by 32.4% in the period. This was
driven by volume growth of 11.7% and pricing growth of 20.7%.
Volume growth was driven by US Cheese sales from the new
large-scale joint venture plant in Michigan which was commissioned
during 2021. Overall end market demand has remained robust during
the quarter. Pricing reflects the higher year-on-year market
pricing. US Cheese operates a robust business model which largely
provides margin protection against dairy price fluctuations.
Joint ventures - continuing operations
The Group's joint ventures have performed in line with
expectations with share of profit after tax lower versus prior year
due to strong comparatives.
Glanbia Ireland disposal
On 1 April 2022, Glanbia completed the disposal of its 40%
interest in the Glanbia Ireland joint venture ("Glanbia Ireland")
to Glanbia Co-operative Society Limited for EUR307 million. Up to
date of disposal, Glanbia Ireland will continue to be presented as
a discontinued operation, separate to the other joint venture
operations which remain part of the Group and are unaffected by
this transaction.
The Group expects a net exceptional gain related to this
transaction.
Share Buyback
Glanbia maintained share buyback activity through the first
quarter deploying EUR91.5 million in the period. Buyback activity
has continued and to-date in 2022 Glanbia has deployed a total of
EUR123.4 million on share buybacks. Glanbia is proposing to renew
its authority to complete share buybacks at the Company's annual
general meeting ("AGM") today. Following the AGM, the Board will
keep the option for further share buybacks under consideration as a
capital allocation tool.
Financing
The Group's balance sheet remains in a strong position.
Glanbia's net debt at 2 April 2022 was EUR552.3 million which
represents an increase of EUR53.8 million versus the net debt
position at the end of the first quarter of 2021. Net Debt
increased due to increased investment in working capital, share
buybacks and the Sterling Technology acquisition net of the receipt
of the proceeds of the sale of the Group's stake in Glanbia
Ireland. Working capital investment was driven by increased
inventory valuations and business activity as well as strategic
sourcing of key ingredients to ensure availability throughout the
year and manage input price changes. Working capital levels are
expected to reduce during the remainder of the year and the Group
is confident of delivering its 80%+ operating cash conversion
target for the full year.
At the end of Q1 2022 the Group had EUR1.2 billion in committed
debt facilities. Glanbia has access to considerable resources from
unutilised debt facilities for further investment in the
business.
AGM
Glanbia is holding its AGM in person at 11.00 a.m. (Irish time)
today at Hotel Kilkenny, College Road, Kilkenny, R95 XD74, Ireland.
Shareholders who alternatively wish to participate remotely in the
AGM can do so and will find details on how to do this on the
Company's website: www.glanbia.com/agm
Ends (1) Like-for-like revenue represents the sales
increase/(decrease) year-on-year, excluding acquisitions made in
the prior 12 months, on a constant currency basis. (2) 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 Q1
2022 was EUR1 = $1.122 (Q1 2021 was EUR1 = $1.204).
Cautionary statement
This announcement 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 report. 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 announcement, whether as a result of
new information, future events, or otherwise.
IMS conference call and webcast details
There will be an analysts' conference call and webcast
presentation to accompany this Interim Management Statement at 8.00
a.m. (BST) today. Please access the webcast from the Glanbia
website at https://www.glanbia.com/investors/results-and-events,
where the presentation can also be viewed or downloaded.
To listen to the call, please dial-in using the following
numbers:
Ireland +353 (0)1 246 5682
UK +44 (0)330 165 4012
Netherlands +31 (0)20 703 8218
France +33 (0)1 70 7 303 39
Italy +39 02 3602 6066
Europe +44 (0)330 165 4012
USA +1 323 701 0160
Pass code 2526909
A replay of the call will be available for 30 days from this
afternoon. Please see the link below to the Investor Relations
section of the Glanbia plc website for details:
https://www.glanbia.com/investors/results-centre
For further information contact
Glanbia plc +353 (0)56 777 2200
Mark Garvey, Group Finance Director
Liam Hennigan, Group Secretary & Head of Investor Relations: +353 (0)86 046 8375
Martha Kavanagh, Head of Corporate Communications: +353 (0)87 646 2006
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END
TSTBKQBBNBKBDPK
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