Siobhan Talbot Group Managing Director 22 February 2017 Mark Garvey Group Finance Director Glanbia plc 2016 Full Year Results Presentation
Siobhan Talbot
Group Managing Director
22 February 2017
Mark Garvey
Group Finance Director
Glanbia plc
2016 Full Year
Results Presentation
Cautionary Statement
Strong cash conversion
Seventh consecutive year of double
digit growth in adjusted EPS
Strong EBITA growth across the Group
Continued EBITA margin
progression across the Group
Full Year 2016 Performance Summary
2016 Full Year Results | Slide 3
Adj. EPS
EBITA
EBITA margin
Free cash flow
87.66c
+11.2% (cc*) +10.8% (rc*)
€305.1m
10.7%
€311.0m
+12.5% (cc*) +12.6% (rc*)
+90 bps (cc*) +90 bps (rc*)
+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 4
Group EBITA progression
Total group EBITA growth +12.8% (cc*), +12.6% (rc*)
Commentary
FY 2016 FY 2015
GLANBIA
PERFORMANCE
NUTRITION
GLANBIA
NUTRITIONALS
JVs & ASSOCIATES
DAIRY IRELAND
GLANBIA
GROUP TOTAL
* CC denotes constant currency; RC denotes reported currency
€310.7m
€349.8m
€135.6m
€106.6m
€39.7m
€28.8m
€162.6m
€111.8m
€44.7m
€30.7m
Strategic Initiatives
Proposal to sell 60% of Dairy
Ireland to Glanbia Coop
Proposed JV in
Michigan
2016 Full Year Results | Slide 5
GPN acquisitions
Amazing Grass and
Body & Fit
JV&A’s
2016 Full Year Results | Slide 6
Strategic rationale and timing
Creates integrated Irish based business of scale –
largest Irish dairy processor
Builds on the successful partnership of Glanbia plc
and Glanbia Coop created in 2012
Strategic logic to create one integrated organisation
to maximise opportunities from anticipated growth in
Irish milk
Investing €250 - €300 million in strategic investment
projects to 2020 for future growth largely funded by
JV bank debt
Key proposals
Non binding memorandum of understanding signed
Expected consideration to plc of €112 million for 60%
equity interest. Pension obligations to transfer to new
entity and working capital to be acquired separately
at completion
New entity to be named “Glanbia Ireland”
-Encompassing Glanbia Ingredients Ireland,
Consumer Products and Agribusiness
Ownership of Glanbia Ireland
60% Glanbia Coop
40% Glanbia plc
Proposal to sell 60% of Dairy Ireland to
Glanbia Coop
New Development Project -
Joint Venture
50/50 JV in Michigan
2016 Full Year Results | Slide 7
• 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
Acquisitions announced in 2017
2016 Full Year Results | Slide 8
• 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
Operational
Review
Innovation
Glanbia
Performance Nutrition
2016 Full Year Results | Slide 10
Performance
Growth
Earnings
Expansion
Strong performance in 2016
Branded revenue growth 13.6% branded revenue growth
Successful launches across the portfolio in ready-to-eat
REVENUE
€1,007.5m
+9.7% (cc) +9.1% (rc)
lfl branded
growth
Rev. +2.6%
Vol. +6.1%
EBITA
€162.6m
+20.0% (cc) +19.9% (rc)
EBITA
margin
16.1%
+130bps (cc) +140bps (rc)
20% Increase in EBITA
130 basis points margin expansion
Glanbia Nutritionals
2016 Full Year Results | Slide 11
Performance Good Performance in 2016
Growth 4.5% EBITA growth with strong H2
Value
Expansion
Continued growth in value- added Nutritional Solutions
30 basis points margin expansion
REVENUE
€1,224.2m
+0.4% (cc) +0.5% (rc)
EBITA
€111.8m
+4.5% (cc) +4.9% (rc)
EBITA
margin
9.1%
+30bps (cc) +30bps (rc)
Project to create one customer-facing organisation complete
Dairy Ireland & JVA’s
DAIRY IRELAND JOINT VENTURES & ASSOCIATES
REVENUE EBITA
EBITA
margin REVENUE EBITA
EBITA
margin
2016 Full Year Results | Slide 12
Good performance driven by value-added products
Strengthening of margins as a result of cost improvements and increased value-added sales
Strong performance driven by volume growth
EBITA growth across all three strategic Joint Ventures
Finance
Review
Summary Income Statement
2016 Full Year Results | Slide 14
Seventh year of
double-digit earnings growth
Reported currency
€'m 2016 2015 Change
Revenue (Wholly-owned) 2,847.9 2,774.3 +2.7%
EBITA (Wholly-owned) 305.1 271.0 +12.6%
EBITA margin 10.7% 9.8% +90 bps
Amortisation of intangibles
Net finance costs
Share of JV&As
Income tax
(39.7)
(22.8)
27.6
(43.3)
(31.1)
(21.1)
26.3
(37.3)
Profit for the year 226.9 207.8
Adjusted Earnings per Share 87.66c 79.14c +10.8%
Constant currency
Change
+2.8%
+12.5%
+90 bps
+11.2%
2016 results summary
pre-exceptional
Segmental Summary
2016 Full Year Results | Slide 15
Strong performance
led by Glanbia Performance Nutrition
FY 2016
€'m Revenue EBITA Margin
Glanbia Performance Nutrition 1,007.5 162.6 16.1%
Glanbia Nutritionals 1,224.2 111.8 9.1%
Dairy Ireland 616.2 30.7 5.0%
Total wholly-owned 2,847.9 305.1 10.7%
Constant currency change
Revenue EBITA Margin
+9.7% 20.0% +130 bps
+0.4% 4.5% +30 bps
-2.7% 6.6% +50 bps
+2.8% 12.5% +90 bps
Revenue Growth by Segment
2016 Full Year Results | Slide 16
€2,600
€2,650
€2,700
€2,750
€2,800
€2,850
€2,900
FY15 FX Glanbia
Performance
Nutrition
Glanbia
Nutritionals
Dairy
Ireland FY16
€2,774m (0.1)%
3.2% 0.2% (0.6)%
* Constant Currency (CC) excluding the impact of FX
€2,848m
Million
Wholly owned Revenue growth
+2.7% (+2.8% CC*)
Revenue Growth by Segment - GPN
2016 Full Year Results | Slide 17
€750
€800
€850
€900
€950
€1,000
€1,050
FY15 FX Volume Price Acquisitions
FY16
€923m (0.6)%
5.0% (4.8)%
9.5% €1,007m
Million
Glanbia Performance Nutrition Revenue growth
+9.1% (+9.7% CC*)
* Constant Currency (CC) excluding the impact of FX
€0
€200
€400
€600
€800
€1,000
€1,200
€1,400
FY15 FX Volume Price FY16
Revenue Growth by Segment - GN
2016 Full Year Results | Slide 18
US Cheese
€743m
Nutritional
Solutions
€475m
Glanbia Nutritionals Revenue growth
+0.5% (+0.4% CC*)
* Constant Currency (CC) excluding the impact of FX
Million
€1,218m 0.1% 3.2% (2.8)% €1,224m
FY15 FY16
US Cheese
€736m
Nutritional
Solutions
€488m
EBITA Progression
2016 Full Year Results | Slide 19
€200
€220
€240
€260
€280
€300
FY15 FX Glanbia
Nutritionals
Dairy
Ireland FY16
€271.0m €0.3m
€27.1m €4.8m €1.9m €305.1m
Million
Wholly owned EBITA growth
+12.6% (+12.5% CC*)
* Constant Currency (CC) excluding the impact of FX
Glanbia
Performance
Nutrition
Exceptional Items Summary
2016 Full Year Results | Slide 20
€'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)
Cash Flow Progression
2016 Full Year Results | Slide 21
* Depreciation includes Grant Amortisation
NOTE: 2016 EBITA reflects the wholly-owned business
€305m
€50m
€32m
€14m
€(32m)
€(53m)
€(4m)
€354m
€311m
€256m
€153m
€120
€170
€220
€270
€320
€370
Million
2016
EBITA
Depreciation* Working
Capital
Business
Sustaining
Capex
2016
Operating
Cash Flow
Net
Interest &
Tax
Dividends
from
JV&A's
Other 2016
Free Cash
Flow
FCF
2015
FCF
2014
Free Cash Flow +22%
converting 88% of EBITDA to cash
Investment
and Returns
2016 2015 2014
€73m
2016 Full Year Results | Slide 22
€116m
€124m
€90m
€86m
€57m
€43m €37m
€32m
ROCE
12.9%
-100bps Strategic Capex
Bus. Sustaining Capex
* Inclusive of estimated contingent consideration
Total Capex
Balance Sheet
2016 Full Year Results | Slide 23
Financing KPI's 2016 2015
Net Debt €438 million €584 million
Net Debt / Adjusted EBITDA¹ 1.19 times 1.75 times
Adjusted EBIT¹ / Net Finance Cost 11.5 times 10.8 times
1. The definition of adjusted EBITDA and adjusted EBIT are as per our financing agreements and include dividends from Joint Ventures & Associates
• Available bank facilities of:
- €722 million revolving credit facilities maturing January 2020
- $325 million private debt placement of senior loan notes, due June 2021
• Net pension obligations of €110.5 million* of which approximately €60 million* relate
to Dairy Ireland
*on an IAS 19 basis
2016 Full Year Results | Slide 24
Proposed sale of 60% interest in Dairy
Ireland to Glanbia Coop
Process and financing
Final agreements to be completed and
shareholder approval required by plc and Coop
Expected to close by mid 2017
100% of the actual working capital in Dairy
Ireland will be acquired by “Glanbia Ireland” on
completion
Transaction expected to be 5% - 7% Adjusted
EPS dilutive
Expected consideration*** to PLC
60% equity interest €112m
3 year Avg. working capital €92.5m * Enterprise Value is an approximate amount based upon the total of
Equity value plus 3 year average working capital plus pension liabilities
associated with Dairy Ireland
** Equity value is net of pension obligations associated with Dairy Ireland
and 3 year average working capital
*** Note final consideration will be the total value of 100% of the actual
working capital at completion plus equity value
Valuation
Enterprise Value (EV of 100%)* €340m
Equity value (100%)** €186m
Summary
& Outlook
Summary & Outlook
2016 Full Year Results | Slide 26
*Pro-forma adjusted EPS of the continuing Group has been calculated assuming the Dairy Ireland transaction was completed at the start of FY 2016.
**Continuing Group as used above includes “Glanbia Ireland” as a 40% associate
***The Dairy Ireland transaction is contingent upon agreement of legal transaction contracts and shareholder approvals
Questions
& Answers
Appendix
2016 Full Year Results | Slide 29
Appendix – Non IFRS Performance Measures
1. To arrive at the constant currency year–on–year change, the results for the prior year are retranslated using the average exchange
rates for the current year and compared to the current year reported numbers.
2. Revenue comprises sales of goods and services of the wholly owned businesses to external customers net of value added tax, rebates
and discounts.
3. EBITA is defined as earnings before interest, tax and amortisation excluding exceptional items.
4. EBITA margin is defined as EBITA before exceptional items as a percentage of the revenue of the wholly owned businesses.
5. Total Group is used to describe certain financial metrics such as Revenue and EBITA when they include both the wholly owned
businesses and the Group's share of Joint Ventures & Associates.
6. Adjusted EPS is defined as the net profit attributable to the equity holders of Glanbia plc, before exceptional items and intangible asset
amortisation, net of related tax, divided by the weighted average number of ordinary shares in issue during the year.
7. Free cash flow is calculated as the net cash flow in the year before the following items: strategic capital expenditure, acquisition spend,
proceeds received on disposals, equity dividends paid, exceptional costs paid, loans to Joint Ventures & Associates and currency
translation movements.
8. Net debt : adjusted EBITDA is calculated as net debt at the end of the year divided by adjusted EBITDA. Net debt is calculated as total
financial liabilities (excluding debt issue costs) less cash and cash equivalents. Adjusted EBITDA is calculated as EBITDA for the
wholly owned businesses (as defined under operating cash flow) plus dividends received from Joint Ventures & Associates, and in the
event of an acquisition in the year, includes pro–forma EBITDA as though the acquisition date had been at the beginning of the year.
9. ROCE is defined as the Group's earnings before interest, tax and amortisation (net of related tax) plus the Group's share of the results
of Joint Ventures & Associates after interest and tax divided by capital employed. Capital employed comprises the sum of the Group's
total assets plus cumulative intangible asset amortisation less current liabilities but excluding all financial liabilities, retirement benefit
assets, cash and deferred tax balances. It is calculated by taking the average of the relevant opening and closing balance sheet
amounts. In years where the Group makes significant acquisitions or disposals, the ROCE calculation is adjusted appropriately, to
ensure the acquisition or disposal are equally time apportioned in the numerator and the denominator.
Email: [email protected] Tel: +353 56 777 2200
Delivering better
nutrition for every
step of life’s
journey
Liam Hennigan
Head of Investor Relations
Glanbia plc
Glanbia House
Kilkenny, Ireland