2010 Half yearly results. 25 August 2010

Transcription

1 25 August

2 Cautionary statement Thispresentation andaccompanyingannouncementaccompanying 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 presentation and accompanying announcements. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actualresults maydiffer materiallyfromthose those expressed or implied by these forward looking statements. The Directors undertake no obligation to update any forwardlooking statements contained in this presentation, whether as a result of new information, i future events, or otherwise. Slide 2

3 Highlights Excellent first half; strong revenue, profit and margin growth Operating profit up 38.7%; constant currency up 49.4% Operating margin up 130 bps to 6.4%; constant currency margin 6.9% Adjusted earnings per share up 50.8% to cents per share Half year dividend increase of 5% to 3.03 cents per share Earnings guidance upgrade to approximately 20% growth for the full year Slide 3

4 Results summary Improvement driven by recovery in Dairy Ingredients Ireland and good performance by Global Nutritionals Change on half year 2009 HY 2010 Reported Constant currency 1 Revenue 2 1,036.4m Up 9.7% Up 9.3% EBITDA 89.2m Up 27.6% Up 34.8% Operating profit 66.3m Up 38.7% Up 49.4% Operating margin 6.4% Up 130 bps Up 180 bps Share of results of Joint tventures & Associates 3 5.0m Up 85.2% Profit after tax 48.6m Up 58.8% Adjusted earnings per share c Up 50.8% Dividend per share in respect of the half year 3.03c Up 5% Net debt 539.3m Down 7.2m 1 Constant currency is based on retranslating HY10 results at prior year exchange rates. 2 Including share of the revenue of Joint Ventures & Associates was 1.2bn, compared with 1.1bn in HY Share of results of Joint Ventures & Associates is an after interest and tax amount. 4 Before exceptional items and amortisation of intangible assets; there were no exceptional items in the first half of 2010 and Slide 4

5 Segmental analysis Including Joint Ventures & Associates Revenue 1.2Bn Operating margin 5.8% Operating profit 77.4m 16% 14% 44% 40% Operating margin 3.5% 25% 61% Operating margin 9.7% (constant currency 10.8%) US Cheese & Global Nutritionals Other Business Dairy Ireland Joint Ventures & Associates Dairy Ireland is the largest business unit by revenue representing 44% of total revenue US Cheese and Global Nutritionals represents 61% of total operating profit Slide 5

6 Group revenue analysis HY 2009 Group Revenue 944.9m9m Volume 4.1% Price 5.3% Currency 03% 0.3% HY ,036.4m US Cheese & Global Nutritionals Dairy Ireland Other Business HY m HY m HY m Volume 10.6% Volume (0.6%) Volume (12.7%) Price 10.9% Price 1.0% Price 12.7% Currency 0.7% Currency 0.0% Currency 0.0% HY m HY m HY m Slide 6

7 Group operating profit analysis 47.8m - Investment in people and brands in US Cheese & Global Nutritionals - Higher milk cost - Currency translation effect 66.3m Up 39% + Volume growth in Global Nutritionals + Price increases in US Cheese and Irish Dairy Ingredients; net of reductions in Consumer Products and Agribusiness + Cost saving in Dairy Ireland Strong volume growth and improved prices more than offset higher operating costs, mainly investment in Global Nutritionals, and translation effects Slide 7

8 2010 operating costs US Cheese & Global Nutritionals Investment in Sales & Marketing headcount Investment in Performance Nutrition brand ddevelopment Increase in Performance Nutrition headcount to support internationalisation Dairy Ireland Focus on controllable costs Planned strategic cost reduction programme on target Headcount reduction; operational efficiency focus On target for annualised cost savings > 10 million per annum Slide 8 Slide 8

9 Pension update and strategy Defined contribution schemes in the USA and other international locations Defined benefit schemes in Ireland and the UK Strategic review of defined benefit arrangements undertaken in 2009 Revised benefits agreed under Irish defined benefit schemes; implementation of which is expected to be completed in 2010 Decrease in net pension deficit half year on half year reflects the impactof the revised benefits outlined above: Net pension deficit HY 2010 HY 2009 '000 '000 Total market value of assets 363, ,821 Present value of scheme liabilities (479,962) 962) (518,159) 159) Net deficit in schemes (116,080) (200,338) Slide 9

10 Operations review and outlook Slide 10

11 US Cheese & Global Nutritionals m Revenue HY 2009 HY m Operating profit 11.2% 9.7% HY 2009 HY 2010 (1) m % EBITDA 12.0% HY 2009 HY Constant currency 10.8% 2 Constant currency 13.1% (2) Market environment Steady growth in US cheese markets; export demandgood US cheese prices recovering from historical lows of 2009 Milk supply tight however growing production in recent months Strong US and international demand for nutritional products Momentum continues in key structural growth trends Whey prices firm HY 2010: US Cheese Reasonable first half Cheese pricing up as markets improved on 2009 Volumes lower due to plant refurbishment Some milk cost pressure Profits and margins lower HY 2010: Global Nutritionals Out performed market growth rates Growing product innovation pipeline Strong revenue growth, largely volume driven Some margin impact of investment in people/brand Overall profit growth Slide 11

12 US Cheese & Global Nutritionals 44.9m - Increase in headcount - Investment in Performance Nutrition brand 47.5m 52.6m Up 17% (constant currency) - Investment in growing international footprint - Cheese plant refurbishment + Significant volume increases in Nutritionals - Currency translation effect + Price improvement mainly in Ingredient Technologies and Cheese Up 6% Slide 12

13 Dairy Ireland Revenue Operating profit m m m % % HY 2009 HY 2010 HY 2009 HY % EBITDA 5.6% HY 2009 HY 2010 Market environment Global dairy prices ahead of low 2009 Demand stable with Asia a key market place Global Milk production tight in Q1; increases in Q2 Significant milk cost increase Farm incomes recovering and input demand improved Recession continues to impact Irish retail market Half year performance A good first half compared with a very difficult HY 2009 Irish Dairy Ingredients returned to profitability as expected Consumer Products lower; higher input costs, price reductions at wholesale level, promotional activity Agribusiness marginally down; good demand; d but competitive ii pricing driving revenue lower Strategic cost saving programme well on target for full year Disposal of Irish businesses On 20 April following an approach from Glanbia Co operative operative Society, the Group announced the proposed disposal of Irish Dairy and Agri Businesses. On 10 May the required approval of the Society s members was not achieved and the transaction has therefore not proceeded. There is no further update. Slide 13

14 Dairy Ireland m + Improvement in prices for Irish Dairy Ingredients Operating profit 19.1m Up 224% + Strategic cost saving programme delivering to plan - Higher milk cost - Wholesale price reductions and strong promotional activity in Consumer Products - Competitive pricing in feed and fertilizer in Agribusiness 0 HY 2009 HY 2010 Slide 14

15 Joint Ventures & Associates Revenue Operating profit m m m EBITDA HY 2009 HY % 5.8% HY 2009 HY % 7.4% HY 2009 HY 2010 Market environment Robust demand Pricing improved in line with improved global dairy markets Positive trends in milk supply Half year performance 40% expansion of Southwest Cheese, in the USA, on track Production volumes up, pricing improved, results ahead Strong first half for Glanbia Cheese in the UK Strong demand, higher prices, improved performance Nutricima in Nigeria improved poed operating performance Sales from new UHT factory are encouraging Slide 15

16 2010 Outlook US Cheese & Global Nutritionals Expected to deliver reasonable year on year growth Dairy Ireland Irish Dairy Ingredients expected to deliver a strong recovery relative to loss in 2009 Consumer Products lower in light of tough trading environment Agribusiness forecast to be broadly in line for the full year Joint Ventures & Associates Good performance forecast for the full year Economic and global dairy market uncertainties remain, creating cautious backdrop to current trading environment Overall expect to achieve strong revenue and operating profit growth Upgrade to approximately 20% growth in adjusted earnings per share in 2010 Slide 16

17 Supplementary financial information Slide 17

18 Segmental analysis including Joint Ventures & Associates HY2010 HY2009 Revenue Operating profit Operating EBITDA EBITDA Revenue Operating profit Operating EBITDA EBITDA m m m m m m US Cheese & Global Nutritionals % % % % Dairy Ireland % % % % Other 2.9 (0.3) (3.0) (2.2) Group as reported 1, % % % % JVs & Associates % % % % Total including JVs & Associates 1, % % 1, % % Reported results exclude Joint Ventures & Associates. Share of results of Joint Ventures & Associates in the income statement is an after interest and tax amount. Slide 18

19 Summary statement of financial position million HY 2010 HY 2009 Change FY 2009 Property, plant and equipment Investments Intangible assets Non current receivables Deferred tax/capital grants (81.0) (39.6) (41.4) (72.9) Working capital Retirement benefit obligations (116.1) (200.3) 84.2 (85.8) Provisions (49.0) (16.3) (32.7) (47.4) Net financing (539.3) (546.5) 7.2 (442.6) Shareholders equity Slide 19

20 Summary cash flow million HY 2010 HY 2009 EBITDA Working capital movement (113.0) (96.5) Net interest and tax paid (12.8) (18.0) Dividends received from Joint Ventures & Associates Capital expenditure/loans to Joint Ventures & Associates (23.0) (43.0) Equity dividends id d paid (11.6) (11.0) Other (including additional pension contributions) 8.4 (7.4) Currency exchange/fair value adjustments (33.9) 2.2 Increase in debt during the period (96.7) (94.4) Net debt at beginning of the period (442.6) (452.1) Net debt at end of the period (539.3) (546.5) Slide 20

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