TIDMGLB
RNS Number : 1453F
Glanbia PLC
03 November 2022
THIRD QUARTER 2022 INTERIM MANAGEMENT STATEMENT
Glanbia revenues up 23.1%(1) for the first nine months of
2022
Full year earnings guidance updated to 10% - 13% growth in
adjusted EPS(2)
03 November 2022 - Glanbia plc, the global nutrition group
("Glanbia", the 'Group', the 'Company' or the 'plc'), is issuing
this Interim Management Statement for the nine month period
ended
1 October 2022 ("YTD third quarter" or "YTD Q3 2022").
Highlights YTD Q3 2022
-- Revenues up 23.1% on a constant currency basis (up 36.8% on a reported basis)
o Pricing +20.9%, volume +0.8%, acquisitions +1.4%
-- Glanbia Performance Nutrition ("GPN") branded like-for-like revenue growth of 14.4%
o Pricing +15.6%, volume -1.2%
o Strong ON brand trends continue; YTD Q3 2022 like-for-like
global revenue growth +22.6%; 12 week North America consumption
growth +32.9%(3)
-- Nutritional Solutions ("NS") like-for-like revenue growth 14.5%
o Pricing +17.7%, volume -3.2%
o Volume decline largely timing related in dairy ingredients
-- Revised ESG ambition for a 50% reduction in Scope 1 and 2
carbon emissions by 2030 (previously a 31% reduction); and
-- Updating full year guidance to 10% to 13% growth in adjusted
EPS constant currency (updated to 26% to 29% growth in reported
currency(4) ).
Commenting today, Siobhán Talbot, Group Managing Director
said:
" I am pleased to report that the momentum outlined at our half
year has been sustained through the third quarter. Consumption
trends continue to be resilient across the performance nutrition
and healthy lifestyle brand portfolios in GPN. Revenue growth was
primarily driven by pricing actions in response to unprecedented
inflation.
The global macro-economic environment continues to be
challenging and we are monitoring consumption and inflation trends
closely. The strength of our platforms in better nutrition,
supported by the combination of pricing actions taken and
operational efficiencies achieved, gives us continued confidence
that we will deliver strong full year EBITA growth.
This confidence sees us today updating our full year guidance to
10% to 13% growth in adjusted EPS, constant currency. Based on
current foreign exchange rates, our reported adjusted EPS growth is
expected to be 26% to 29%."
(1) Constant 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 Q3 2022 was EUR1 =
$1.06 (Q3 2021 was EUR1 = $1.196)
(2) Adjusted earnings per share ("EPS") for continuing
operations on a constant currency basis
(3) Consumption growth is measured in North American channels
and includes Online, FDMC (Food, Drug, Mass, Club) and Specialty
channels. Data compiled from published external sources and Glanbia
estimates to 2 October 2022
(4) Based on foreign exchange rates being sustained at current
rates for the remainder of 2022
Summary revenue progression
Summary of YTD Q3 2022 revenue progression
versus prior year
Reported
Constant currency movement movement
=========================================================
Total
constant Total
Volume Price Like-for-like Acquisition currency reported
======= ==========
Glanbia Performance
Nutrition (2.2%) 15.4% 13.2% 0.5% 13.7% 24.8%
---------------------- ------- ------ -------------- ------------ ---------- ----------
Glanbia Nutritionals 2.2% 23.5% 25.7% 1.7% 27.4% 42.3%
---------------------- ------- ------ -------------- ------------ ---------- ----------
Nutritional
Solutions (3.2%) 17.7% 14.5% 5.8% 20.3% 32.6%
US Cheese 4.5% 26.0% 30.5% - 30.5% 46.7%
---------------------- ------- ------ -------------- ------------ ---------- ----------
Total wholly-owned
businesses 0.8% 20.9% 21.7% 1.4% 23.1% 36.8%
====================== ======= ====== ============== ============ ========== ==========
In the nine months ended 1 October 2022 compared to the same
period in 2021, wholly-owned revenue increased 23.1%, constant
currency. On a reported basis, reflecting the stronger Euro US
Dollar foreign exchange rate, revenue increased 36.8%. The drivers
of the revenue increase, on a constant currency basis was volume
growth of 0.8% across the Group, price increase of 20.9% and
acquisitions delivering 1.4%.
GPN revenue grew by 13.7% constant currency (up 24.8% reported)
on prior year driven by a 2.2% reduction in volume, favourable
pricing of 15.4% and the positive impact of acquisitions of 0.5%.
GPN branded like-for-like revenue grew by 14.4% driven by 15.6%
growth in pricing and a volume decline of 1.2%. GPN continued to
have good volume and consumption growth in performance nutrition
and healthy lifestyle brands offset by the continuing headwinds in
the diet category. Pricing was positive across all GPN brands.
GN revenues grew 27.4% constant currency (up 42.3% reported) on
prior year driven by volume growth of 2.2%, price increases of
23.5% and the positive impact of acquisitions of 1.7%. GN volume
growth was driven by growth in the NS non-dairy portfolio and US
Cheese.
Outlook
Glanbia updates its guidance that adjusted EPS for the
continuing Group is expected to grow 10% to 13% constant currency
for full year 2022. Should the current foreign exchange rate be
sustained for the remainder of 2022, the reported full year
adjusted EPS growth would be expected to be in a range of 26% to
29%.
The continued resilience of Glanbia's better nutrition platforms
supports the Group's confidence in its ability to navigate the
current external risks including the challenging economic
environment, the impact of geopolitical tensions, and ongoing
inflation. In the absence of any further unanticipated major market
disruption, Glanbia expects to deliver strong revenue and earnings
growth for 2022.
The Group outlines the following guidance for full year
2022:
-- GPN expects to deliver low teens percentage revenue growth
(constant currency) and NS expects strong double-digit percentage
revenue growth (constant currency). Revenue growth in both
platforms is expected to be driven by pricing.
-- EBITA growth is expected to be delivered in GPN, GN NS and US
Cheese. Joint Ventures performance expectations are unchanged.
-- GPN expects to deliver the targeted EBITA margin of 12% in
the fourth quarter, resulting in a full year margin broadly in line
with the prior year. In NS, the expected full year margin
contraction of c.100 basis points will be driven by the
mathematical dilution related to significant pricing changes,
particularly in dairy ingredients.
-- The Group is targeting an operating cash flow conversion rate of 80% for FY 2022.
Glanbia Performance Nutrition (all commentary is on a constant
currency basis)
GPN delivered revenue growth of 13.7% in the first nine months
of 2022. Revenue growth was driven by pricing action of 15.4%,
volume decline of 2.2% and the LevlUp acquisition contributed 0.5%.
Branded like-for-like revenue for the period increased by 14.4%,
with 15.6% pricing growth and a volume decline of 1.2%.
Strong momentum continued across the majority of the GPN branded
portfolio. Pricing action was taken across all brands, in all
regions, in response to inflationary trends. The global ON brand,
which represents 54.2% of the GPN portfolio, continues to deliver a
strong performance with year-to-date global shipments up 22.6%.
Strong marketing activation, distribution gains and innovation
continues to underpin consumption growth trends; in the key North
American market ON consumption in the 12 weeks to the beginning of
October was up 32.9%.
Americas
GPN Americas delivered 13.4% revenue growth in the period.
Excluding the impact of the contract business, which has been
exited in North America, branded like-for-like revenues increased
14.6%. This was driven by good volume growth in the performance
nutrition and healthy lifestyle brand portfolios, with a volume
decline in the SlimFast brand as the expected weakness in the diet
category continues. Pricing action was taken across all brands in
response to inflationary trends.
Strong consumption trends for ON continue in the Americas
market. ON innovations across new consumer opportunities in plant
protein, dairy RTD and energy/hydration are in market and
performing well to date. Strong consumption trends in the healthy
lifestyle portfolio also continued with consumption growth in the
12 weeks to the beginning of October of 15.8% across the think!,
Isopure and Amazing Grass brands. The SlimFast brand performance
continues to be impacted by headwinds in the diet category with
consumption in the 12 weeks to the beginning of October down 18.2%.
The brand refresh is on track to be in market in advance of the key
early 2023 diet season, supported by new brand and pack design,
creative content and innovation.
International
GPN International, which includes direct-to-consumer ("D2C")
brands, delivered 14.5% revenue growth in the period driven by
price growth as well as the LevlUp acquisition.
Pricing was positive in all markets due to price increases
implemented in response to cost inflation. While there was some
elasticity in Q3 due to pricing and FX trends, we expect to deliver
volume growth in key markets in Q4.
Glanbia Nutritionals (all commentary is on a constant currency
basis)
GN delivered strong revenue growth in the first nine months of
2022 versus prior year. Revenue increased by 27.4% driven by a
volume increase of 2.2%, a price increase of 23.5% and acquisitions
delivering 1.7% revenue growth.
Nutritional Solutions
NS revenue increased by 20.3% in the period. Pricing actions
across all elements of the portfolio, in response to material cost
inflation, increased revenue by 17.7%. Volumes declined by 3.2%
reflecting lower customer offtakes in Q3 primarily in dairy
ingredients, which we expect to largely recover in Q4. The PacMoore
and Sterling Technology acquisitions continue to perform well
contributing 5.8% to revenue growth in the period.
NS continues to support customers seeking to address growing
consumer trends such as nutrition supplementation, functional and
nutritional protein and specialised nutrition. Our innovation
pipeline remains strong, delivering growth in the period in our
customised premix business, particularly in the EMEA and Asia
Pacific regions. This good volume momentum is expected to be
sustained in premix into Q4.
US Cheese
US Cheese revenue increased by 30.5% in the period. This was
driven by volume growth of 4.5% and pricing growth of 26.0%. Volume
growth was driven by end market demand and the new joint venture
plant in Michigan which was commissioned during 2021. Price
increases were aligned to the higher year-on-year market
pricing.
Share Buyback
On 30 September 2022, Glanbia completed its previously announced
share buyback programme. Between 23 June 2022 and 30 September
2022, Glanbia deployed EUR50 million, repurchasing 4,301,115
ordinary shares on Euronext Dublin at an average price of EUR11.62.
In the year-to-date, Glanbia has deployed a total of EUR173.5
million on share buybacks. Glanbia will continue to assess the
opportunity for share buybacks as part of its broader capital
allocation policy.
Financing
The Group's balance sheet remains in a strong position.
Glanbia's net debt at 1 October 2022 was EUR749.6 million which
represents an increase of EUR160.6 million versus the net debt
position at the end of the third quarter of 2021, of which EUR91.9
million relates to the foreign exchange impact of a strong US
Dollar. Investment in working capital is expected to reduce by the
year end and the Group continues to target a full year operating
cash conversion of 80%.
At the end of Q3 2022 the Group had EUR1.3 billion in committed
debt facilities.
ESG
Glanbia continues to make good progress on its series of ESG
initiatives. In the environmental programme, Glanbia has recently
completed a process to re-align its Scope 1 and 2 decarbonisation
agenda with a Science Based Targets initiative ("SBTi") 1.5 degree
pathway. The revised ambition is for a 50% reduction (previously a
31% reduction) in Scope 1 and 2 carbon emissions by 2030 from a
2018 base.
Aligned to this overall ambition for scope 1 and 2 carbon
emissions reduction by 2030, Glanbia has approved the ESG metric
applicable to its 2022 Long Term Incentive Plan ("LTIP"). The ESG
target will represent 20% of the total 2022 LTIP award, with the
target set to achieve between a 20% and 29% reduction in Scope 1
and 2 emissions by 2024 compared to 2021 emissions outturn.
Capital Markets Event
The Group will hold a Capital Markets event on Wednesday, 9
November 2022 at its GPN US facility in Aurora, Illinois. The event
will focus on the Group's growth agenda and provide an overview of
the strategies in the growth platforms GPN and NS. The event will
also provide attendees with an opportunity to tour the
manufacturing facility and meet divisional management. For those
interested in attending, registration is available at the following
link: https://glanbia.connectid.cloud/
Ends
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 8.30
a.m. (GMT) 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)1 536 9584
United Kingdom +44 (0)203 936 2999
Netherlands +31 (0)85 888 7233
France +33 (0)9 70 73 39 58
Italy +39 (0)6 9450 1060
United States +1 646 664 1960
All other locations +44 20 3936 2999
Access code: 964059
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, Director of Corporate Affairs: +353 (0)87 646 2006
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END
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