Glanbia reports rising profits as it prepares to weather inflationary pressures

03 Mar 2022 --- Glanbia is optimistic that it is past the worst of the COVID-19 pandemic, although inflation is having an impact on the Ireland-based nutrition group. In its full-year 2021 results, the group also reports strong growth, with revenue rising nearly 10% to slightly below €4.2 billion (US$4.7 billion).

“COVID-19 has accelerated the trends into which we play – health, well-being, immunity,” a Glanbia spokesperson tells NutritionInsight.

With Glanbia reporting strong consumption trends for Glanbia Performance Nutrition (GPN), the spokesperson notes that these sports and lifestyle nutrition products are more relevant to a wider audience than before. 

“Our brands provide options for both high-performance athletes and those who simply want to live a healthier lifestyle. We have also rolled out successful campaigns in our leading brands, which have engaged our consumers,” they add. Glanbia is mitigating inflation through additional pricing action and cost reduction efficiency programs. 

Addressing Glanbia’s strategy
Overall group revenue was well ahead of expectations at the beginning of 2021, notes Siobhán Talbot, group managing director. 

“It was driven by strong global consumer demand in Glanbia’s areas of nutrition expertise across ingredient solutions and our portfolio of nutrition brands. 

She continues that Glanbia’s strategic focus for 2022 and beyond is to drive growth across both GPN and Glanbia Nutritionals, Nutritional Solutions (GN NS) as “the nutrition partner of choice to customers and consumers.”

Notably, these two platforms are Glanbia’s first priority for investment and capital allocation, and their growth and development will be driven by a combination of both organic growth and acquisitions.

“This clear focus on better nutrition across brands and ingredient solutions, which contributes over 90% of wholly‐owned EBITA, is well‐supported by the group’s naturally strong cash generation,” states Glanbia. 

Ultimately, GPN revenue was up 14.5% to €1.3 billion (US$1.4 billion). Meanwhile, GN NS saw 17.5% revenue growth to reach €2.9 billion (US$3.2 billion), which Glanbia says reflects strong end-market demand and customer engagement.

Navigating inflation
Talbot also anticipates that during 2022, the effects of COVID-19 will further abate. 

“However, the ongoing impact of cost inflation, especially dairy-related, will need to continue to be actively managed as it was in 2021,” she states. 

Specifically in GPN during the second half of 2021, “effective pricing actions” were implemented to help mitigate growing inflationary pressures. This will continue throughout 2022. 

In addition, the efficiency benefits of the GPN transformation program, incremental cost savings and dairy raw material forward purchases are expected to further mitigate the effects of cost inflation.Siobhán Talbot, group managing director, believes the impacts of COVID-19 are abating.

The spokesperson adds that Glanbia is monitoring inflation closely and managing its impact, as are “most companies” at this point.

“We have passed on price increases in both GPN and GN and will keep this under further review for 2022. Inflation at this time is broad-based. The conflict in Ukraine obviously adds to the uncertainty of the macroeconomic situation at this moment in time,” they continue. 

Continuous innovation lies ahead
Looking ahead, Glanbia expects both GPN and GN NS to deliver high single‐digit percentage revenue growth for 2022, largely driven by pricing.

“Based on today’s market environment and current expectations for the remainder of the year, we expect adjusted EPS growth for continuing operations of 2% to 8%, constant currency for FY 2022, with growth primarily driven by GN NS. Based on current foreign exchange rates, we expect the reported growth rate to be 5% higher than the constant currency result,” adds Talbot.

The spokesperson also notes that Glanbia is continuously growing its R&D and innovation hubs, which illustrates the demand for immunity, functional nutrition and healthy snacking from its customers.

“We are constantly looking for new innovative technologies to serve our customer base. This can be seen in the acquisition of PacMoore last year, which adds to our functional capability in healthy snacking,” they conclude. 

By Katherine Durrell