Glanbia Reports Record Results, Driven by Nutritionals
13 Mar 2013 --- Glanbia plc has reported 22.1% growth in adjusted earnings per share in reported currency, 14.2% in constant currency, ahead of expectations in 2012. The strong performance was driven by Global Nutritionals where like for like revenue grew 20% reflecting positive markets and strong operational performances in each business unit.
Commenting today John Moloney, Group Managing Director, said: "The Group delivered strong organic revenue growth and a 22.1% increase in adjusted earnings per share; the third consecutive year of double digit progression. We also achieved a landmark agreement with our majority shareholder, Glanbia Co-operative Society, which restructured our Irish dairy processing business from a wholly owned operation to an associate. In addition, the Society's ownership of the plc will reduce to 41.3% and the composition of the Board will evolve on a phased basis from 2016.”
"The prospects for 2013 are good, although we remain cautious given the global environment. We expect adjusted earnings per share growth, on a constant currency basis, of between 8% and 10% for the full year from a base of 51.02 cents. The Irish dairy processing transaction facilitates a concentrated focus on our international growth and the longer-term prospects for Glanbia are very positive. We are in a stronger position than ever to drive the business forward and capitalise on our competitive advantage in both business-to-business and business-to-consumer nutritional products and solutions."
Glanbia delivered a strong financial performance in 2012 as continued momentum in Global Nutritionals drove a third consecutive year of good organic revenue and earnings growth. On a constant currency basis, Total Group revenue including the proforma Group share of joint ventures & associates was €2.9 billion; €2.1 billion in the wholly owned businesses, up 8.3% and €0.8 billion in the joint ventures and associates, down 3.3%. Total Group EBITA margin was 6.9%, reflecting a 7.8% margin in the wholly owned businesses, up 50 basis points and 4.6% in the Joint Ventures & Associates, down 30 basis points. Adjusted earnings per share grew 14.2% on a constant currency basis, ahead of expectations.
One of the main 2012 business focus areas for the Group was to clarify our strategic approach to the potential opportunity for expansion in Irish dairy processing, which will arise as a consequence of the abolition of EU milk quotas in 2015. The disposal of 60% of our Irish dairy processing business, Dairy Ingredients Ireland, on 25 November 2012 to Glanbia Co-operative Society Limited (the "Society") achieved this and has led to a strategic reorganisation of the segmental structure of Glanbia. This business became an associate of the Group and the newly formed entity is named Glanbia Ingredients Ireland Limited ("GIIL"). This reorganisation has reduced the Group's overall exposure to global dairy markets and potential earnings volatility. It also clarified future capital allocation priorities, enabling Glanbia to focus its resources on the areas of highest sustainable growth.
The Group also undertook a significant programme of investment in capital projects and acquisitions in 2012 amounting to €115 million. This included the €45 million acquisition of Aseptic Solutions in the USA to enhance Global Nutritionals' Ingredient Technologies; the opening of a state-of-the-art Customised Premix Solutions plant in Europe; capacity expansion in Performance Nutrition and a new cheese innovation centre in Idaho. The return on capital employed achieved by the Group increased by 130 basis points to 14.1%.
Improvements in key financial ratios were also achieved during the year. Net debt to adjusted EBITDA at year end was 1.7 times and interest cover was 8.1 times. Glanbia also successfully renewed its banking facilities totalling €468 million, extending maturity out to 2018. This complements the $325 million private debt placement completed in 2011 which matures in 2021.
There were a number of Board changes during the year. Kevin Toland, CEO & President of Glanbia USA and Global Nutritionals and an Executive Director, left Glanbia after 13 years at the end of 2012. Brian Phelan, who has been with the Group since 1993, was appointed to the Board with effect from 1 January 2013 as an Executive Director with responsibility for Group Development and Global Cheese. Jer Doheny joined the Board in June 2012 as a Society nominee, replacing James Gannon, also a Society nominee. Donard Gaynor joined the Board on 12 March 2013 as a Non Executive Director.
“We are guiding 8% to 10% year-on-year growth in adjusted earnings per share, on a constant currency basis, from 51.02 cents, which takes into account the dilutive effect of the GIIL transaction. There are some headwinds with an uncertain global economic environment and challenging Irish retail environment, but the Group is well positioned to maintain its growth momentum. We are in a stronger position than ever to capitalise on the competitive advantages we have in high growth markets. Our focus in 2013/2014 will be to refresh the Group's strategy so that we prioritise growth opportunities in terms of a long-term plan and focus our investment on the areas that will deliver strong returns to shareholders,” the company reported.
