Glanbia plc publishes results for 2019

Global nutrition group Glanbia plc has reported higher revenues of €3,876 million for 2019, driven by a strong performance in Glanbia Nutritionals and acquisitions, with earnings impacted by challenges in Glanbia Performance Nutrition.

Glanbia delivered strong revenue growth in 2019 with revenue increasing by 16.6% to €3,876 million.

The drivers of revenue growth included a 6.6% increase in pricing, a 9.9% contribution from acquisitions with overall volume broadly in line with 2018. Price and volume growth was driven by a good performance from Glanbia Nutritionals (GN) with the acquisitions of Watson and SlimFast also performing well in 2019.

Siobhán Talbot, Group Managing Director, said: “Glanbia has delivered a 16.6% increase in revenues in 2019, driven by a strong performance from our Glanbia Nutritionals segment, and by the acquisitions of SlimFast and Watson. GN saw broad-based volume growth with notable performances in vitamin and mineral blends, and healthy snack ingredients, underlining the continued consumer shift towards health and wellness.

“It was disappointing that earnings were impacted by challenges in the Glanbia Performance Nutrition (GPN) segment and to address these we have conducted a comprehensive business review and are taking actions to simplify our business, allowing us to concentrate on our core brands, and optimising our routes to market across channels and geographies. As a result, we expect GPN to regain branded revenue growth momentum in 2020.

“Glanbia is financially strong and cash generative. We have increased our dividend by 10% and we are proposing to our shareholders that we adopt a share buyback programme in 2020.

“We are confident that the actions being taken will position the company to generate enhanced shareholder value in a growing healthy nutrition market.”

2019 Financial Overview

Wholly-owned EBITA was €276.8 million, a 7.8% decline and EBITA margin was 7.1%, 190bps lower than 2018. EBITA decline was driven by GPN which, as previously noted, encountered challenges in International markets throughout 2019 as well as lower sales in the North American Specialty and Club channels resulting in lower volumes and negative operating leverage. This decline was partially offset by a 10.5% increase in EBITA in GN driven by volume growth, price increases and the Watson acquisition.

Glanbia’s share of JVs’ profit after tax increased by €3.3 million to €48.6 million in 2019 primarily as a result of good growth in volume in all JVs. Total Group profit after exceptional items was €180.2 million.

Exceptional items of €34.6 million, after tax, primarily relates to the GPN segment as well as Brexit mitigation costs and acquisition integration costs in 2019. There were no exceptional items in 2018.

Total Group profit was €214.8 million for 2019 down from €234.0 million in 2018 as a result of lower year-on-year EBITA.

As a result of lower Group profit, adjusted earnings per share was 88.10 cent which was 7.7% lower than 2018 but within the previously issued guidance range. Basic earnings per share was 61.04 cent, a 26.6% decrease on prior year, reflecting lower Group profit and exceptional charges in the year.

Review of Operations and Markets

In light of the significant performance issues in GPN in 2019 a comprehensive review of this business’s brand strategy, route-to-market and business model took place in the second half of 2019.

GPN will now be managed as North America Performance Nutrition, North America Lifestyle, International and Direct-to-Consumer businesses. GPN has invested in new senior talent to enhance capabilities and enable growth in each of these businesses.

In North America, GPN has two distinct brand portfolios in the performance nutrition and lifestyle categories.

In International markets, GPN is reshaping primarily around the Optimum Nutrition (ON) brand in the performance nutrition category and the Body & Fit direct-to-consumer online platform in Europe which also enhances GPN’s digital capability globally.

SlimFast grew strongly in 2019 to revenue of $325 million and anchors the North America Lifestyle portfolio, while The Body & Fit direct-to-consumer platform is the key path to growth in the online channel in Europe, as well as providing digital capability which can be leveraged on a global basis.

Alongside the revenue growth initiatives undertaken in GPN, Glanbia has established a Group-wide project to drive margin improvement to 2022. This will include simplification and exit of low margin business alongside other measures.

At a Group level, Glanbia is reviewing the current operating model across GPN and GN to identify opportunities to further leverage Glanbia’s scale. This project is ongoing with further updates to be announced in due course.

2020 Outlook

In 2020, Glanbia expects to deliver adjusted earnings per share broadly in line with prior year on a constant currency basis.

Glanbia expects GPN to deliver branded revenue, margin and EBITA progression in 2020 versus prior year. In GN, Nutritional Solutions continued revenue momentum is expected to be offset by margin headwinds. Joint Venture performance year-on-year is expected to decline largely due to commissioning costs of new joint venture capital projects.

Dividend

The Board is recommending a final dividend of 15.94 cent per share which brings the total dividend for the year to 26.62 cent per share, a 10% increase on prior year. This total dividend represents a return of €78.8 million to shareholders from 2019 earnings and a payout of 30.2% of 2019 adjusted earnings per share. The final dividend will be paid on 24 April 2020 to shareholders on the share register on 13 March 2020.

Share buyback authorisation

The Board of Glanbia will seek shareholder authorisation for a share buyback programme at the Annual General Meeting on the 22 April 2020.

Board Changes

In accordance with the amended and restated Relationship Agreement dated 2 July 2017 between the Company and Glanbia Co-Operative Society Limited, a process to identify a successor to Martin Keane as Chairperson has commenced. A sub-committee of the Board, led by Dan O’Connor, Senior Independent Director, has been established. External advisors have been appointed to assist the sub-committee in the selection process.

Richard Laube will retire on 28 February 2020. Jer Doheny and Eamon Power (directors nominated by the Society) will retire from the Board at the forthcoming AGM on 22 April 2020. In accordance with the Relationship Agreement, in 2020 the number of directors nominated by the Society will reduce from eight to seven and in 2022 the number of directors nominated by the Society will reduce to six. Replacements will be announced in due course.

First Published 26 February 2020