Glanbia plc 2017 Half Year Results Presentation

Transcription

1 Glanbia plc 2017 Half Year Results Presentation 10 August 2017 Siobhan Talbot Group Managing Director Mark Garvey Group Finance Director

2 Cautionary Statement

3 Half Year 2017 Performance Summary Adjusted EPS 48.04c % (cc ) +9.3% (rc) Dairy Ireland transaction Glanbia Ireland Transaction completed on 2 July 2017 and Glanbia Ireland is now operational 2 Pro-forma Adjusted EPS 46.09c % (cc ) +13.2% (rc) Pro-forma adjusted EPS guidance of 7-10% reiterated for full year 1. CC denotes constant currency; RC denotes reported currency 2. Pro-forma adjusted EPS for continuing operations assumes that the Dairy Ireland transaction occurred at the beginning of FY 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 the first half of 2017 was 1 = $1.083 (HY 2016: 1 = $1.116). 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 Half Year Results Slide 3

4 Pro-forma Continuing Group progression 618.9m +17.0% (cc) +17.0% (rc) Revenue 37.3m +48.0% (cc) +48.6% (rc) EBITA 1,805m 186m 1,185.7m +7.3% (cc) +10.0% (rc) JV&A s Wholly owned 148.3m +3.5% (cc) +6.6% (rc) CC denotes constant currency; RC denotes reported currency The figures displayed are on a pro forma basis which assumes that 40% of Dairy Ireland results are captured in JV&A s from the beginning of 2016 Wholly owned continuing operations include the Glanbia Performance Nutrition and Glanbia Nutritionals segments 2017 Half Year Results Slide 4

5 Pro-forma Continuing Group EBITA margin profile Pro-forma continuing Group EBITA margin HY17 HY16 Growth Wholly owned 12.5% 12.9% -40 bps Joint Ventures & Associates 6.0% 4.7% +130 bps Pro-forma Total Group 10.3% 10.2% +10 bps Pro-forma above assumes 40% of Dairy Ireland results are captured in JV&A s from the beginning of Half Year Results Slide 5

6 Strategic Highlights Acquisitions H Leading plant-based nutrition brand Increases GPN s position with lifestyle consumers Leading European online brand Opportunity to build DTC* platform in Europe *Direct-to-consumer 2017 Half Year Results Slide 6

7 Strategic Highlights Joint Ventures & Associates Glanbia Ireland Creation of Glanbia Ireland on 02 July 2017 encompassing the businesses of Glanbia Ingredients Ireland and Dairy Ireland Southwest Cheese 25% increase in capacity expected to be commissioned in H Michigan JV New US cheese/whey plant Plans on track for Half Year Results Slide 7

8 Operational Review

9 Glanbia Performance Nutrition Performance Growth Solid performance - Improved momentum in Q2 Good revenue growth in LAPAC & EMEA REVENUE 543.5m +5.4% (cc) +7.6% (rc) Lfl* branded growth +0.7% Earnings Innovation Robust margins given increased input costs Strong performance in ready-to-eat format EBITA 83.9m +0.2% (cc) +3.1% (rc) EBITA margin 15.4% -80 bps (cc) -70 bps (rc) *Lfl: Like-for-like Branded 2017 Half Year Results Slide 9

10 Glanbia Nutritionals Performance Growth Good revenue and EBITA progression 8.1% EBITA growth driven by Nutritional Solutions REVENUE 642.2m +9.0% (cc) +12.2% (rc) EBITA Added-Value Expansion Good business development across dairy and non-dairy systems Broad-based growth across customers & geographies EBITA margin 10.0% -10 bps (cc) -10 bps (rc) 64.4m +8.1% (cc) +11.6% (rc) 2017 Half Year Results Slide 10

11 JVA s & Dairy Ireland JOINT VENTURES & ASSOCIATES (Glanbia share) DAIRY IRELAND (Discontinued Operations*) REVENUE EBITA EBITA margin REVENUE EBITA EBITA margin Strong performance driven by improved dairy markets EBITA growth across all three strategic Joint Ventures & Associates Sale of 60% of Dairy Ireland completed on 2 July 2017 Margin compression as a result of increased dairy input costs *Dairy Ireland and related assets are classified as discontinued operations as a result of disposal of 60% of Dairy Ireland 2017 Half Year Results Slide 11

12 Finance Review

13 Pro-forma adjusted EPS progression Half Year Full Year +7-10%(cc) CC denotes constant currency; RC denotes reported currency *Pro-forma adjusted EPS for continuing operations assumes that the Dairy Ireland transaction occurred at the beginning of FY Half Year Results Slide 13

14 Summary Income Statement HY 2017 results summary pre-exceptional items Reported currency 'm HY 2017 HY 2016 Change Wholly owned Continuing* Revenue 1, , % EBITA % EBITA margin 12.5% 12.9% -40 bps Amortisation of intangible assets Net finance costs Share of JV&As Income tax (21.8) (11.8) 22.3 (20.5) (18.2) (11.6) 11.1 (19.4) Profit from continuing operations *Profit after tax from discontinued operations % Adjusted EPS 48.04c 43.96c +9.3% Constant currency Change +7.3% +3.5% -50 bps -41.9% +6.5% *Wholly-owned continuing operations exclude the results of Dairy Ireland and related assets. The results of Dairy Ireland are presented within the profit after tax from discontinued operations 2017 Half Year Results Slide 14

15 Segmental Summary wholly owned continuing operations Good performance driven by Glanbia Nutritionals HY 2017 'm Revenue EBITA Margin Glanbia Performance Nutrition % Glanbia Nutritionals % Wholly owned continuing operations 1, % Constant currency change Revenue EBITA Margin +5.4% +0.2% -80 bps +9.0% +8.1% -10 bps +7.3% +3.5% -50 bps 2017 Half Year Results Slide 15

16 Revenue Growth by Segment - GPN Glanbia Performance Nutrition Revenue growth +7.6% (+5.4% CC*) Million m 2.1% (0.8)% 0.0% 6.2% 544m HY16 FX Volume Price Acquisitions HY17 *Constant currency (CC) excluding the impact of FX 2017 Half Year Results Slide 16

17 Revenue Growth by Segment - GN Glanbia Nutritionals Revenue growth +12.2% (+9.0% CC*) Million m Nutritional Solutions 235m 2.9% 3.1% 5.9% 642m Nutritional Solutions 286m 200 US Cheese 338m US Cheese 357m 0 HY16 FX Volume Price HY17 *Constant currency (CC) excluding the impact of FX 2017 Half Year Results Slide 17

18 Dairy Ireland transaction update Transaction closed on 02 July 2017 Total proceeds expected to be c. 200m: 112m received prior to half year Working capital proceeds of 90m - 100m to be received by end October 2017* Glanbia Ireland comprises Glanbia Ingredients Ireland and Dairy Ireland: 40% owned by Glanbia plc 60% owned by Glanbia Co-operative Society Limited *Final working capital amount subject to agreement of completion accounts 2017 Half Year Results Slide 18

19 Exceptional Items Summary Continuing Operations HY 2017 HY 2016 FY 2016 Organisation redesign costs - (6.2) (11.3) Acquisition integration costs - (1.9) (3.1) Exceptional (charge) pre-tax - (8.1) (14.4) Taxation credit Net exceptional (charge) - (6.6) (12.1) Discontinued Operations Dairy Ireland transaction related costs (13.0) - Rationalisation costs - (0.8) (3.0) Exceptional (charge) pre-tax (13.0) (0.8) (3.0) Taxation credit Net exceptional (charge) (10.9) (0.7) (2.7) Total exceptional (charge) (10.9) (7.3) (14.8) *The Dairy Ireland transaction completed after the period end. As a result the gain arising on disposal has not been reflected in the H1 results. This will be reported in the 2017 full year financial statements 2017 Half Year Results Slide 19

20 Balance Sheet Financing KPI's HY 2017 HY 2016 FY 2016 Net Debt 608.4m 644.3m 437.5m Net Debt / Adjusted EBITDA¹ 1.63 times 1.83 times 1.19 times Adjusted EBIT¹ / Net Finance Cost 11.4 times 11.4 times 11.5 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 1bn Increased investment in working capital expected to substantially unwind by year end Capex of 33.3m 19.1m strategic Pension liabilities of 45.6m a reduction of 64.9m on FY 2016 *on an IAS 19 basis 2017 Half Year Results Slide 20

21 Summary & Outlook

22 Summary & Outlook Pro-forma adjusted EPS Half Year Full Year +7-10%(cc) CC denotes constant currency; RC denotes reported currency *Pro-forma adjusted EPS for continuing operations assumes that the Dairy Ireland transaction occurred at the beginning of FY Half Year Results Slide 22

23 Questions & Answers

24 Appendix

25 Appendix Contents 1.Non-IFRS Performance Measures definitions 2.Pro-forma impact of Dairy Ireland divestment 3.Results of discontinued operations 4.Reconciliation of reported revenue to constant currency 5.Reconciliation of reported EBITA to constant currency 6.Total Group EBITA margin 7.Net Debt ratio & finance costs reconciliation 8.Adjusted EPS HY V- HY Half Year Results Slide 25

26 1 - Non IFRS Performance Measures definitions The Group reports certain performance measures that are not defined under IFRS but which represent additional measures used by the Board of Directors and the Glanbia Operating Executive in assessing performance and for reporting both internally and to shareholders and other external users. The Group believes that the presentation of these non IFRS performance measures provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides readers with a more meaningful understanding of the underlying financial and operating performance of the Group. 1. While the Group reports its results in euro, it generates a significant proportion of its earnings in currencies other than euro, in particular US dollar. Constant currency reporting is used by the Group to eliminate the translational effect of foreign exchange on the Group s results. 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. Total Group has a number of strategically important Equity accounted investees (Joint Ventures & Associates) which when combined with the Group s wholly owned businesses give an important indication of the scale and reach of the Group s operations. 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 3. Revenue comprises sales of goods and services of the wholly owned businesses to external customers net of value added tax, rebates and discounts. 4. EBITA is defined as earnings before interest, tax and amortisation excluding exceptional items. 5. EBITA margin is defined as EBITA before exceptional items as a percentage of the revenue of the wholly owned businesses. Total Group EBITA margin is defined as Total Group EBITA as a percentage of Group revenue 6. Adjusted EPS is defined as the net profit attributable to the equity holders of Glanbia plc, before exceptional items and intangible asset amortisation (excluding amortisation of software costs), net of related tax, divided by the weighted average number of ordinary shares in issue during the year. During the current year the calculation of adjusted Earnings Per Share was amended to exclude the cost of software amortisation within the earnings calculation. The Group believes that adjusted EPS is a better measure of underlying performance than Basic EPS as it excludes exceptional items that are not related to on-going operational performance and intangible asset amortisation, which allows better comparability of companies that grow by acquisition 2017 Half Year Results Slide 26

27 1 - Non IFRS Performance Measures definitions 7. Pro-forma adjusted Earnings per share is defined as the net profit from continuing operations attributable to the equity holders of Glanbia plc before exceptional items and intangible asset amortisation (excluding amortisation of software costs) net of related tax plus the Group s share (40%) of the profits after tax of Dairy Ireland and related assets, before exceptional items and intangible asset amortisation (excluding amortisation of software costs) net of related tax 8. Adjusted EBIT : net finance cost is calculated as earnings before interest and tax plus dividends received from equity accounted investees divided by net finance cost. Net finance cost comprises finance costs less finance income per the condensed Group income statement plus capitalised borrowing costs 9. 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. 10. Volume represents the impact of sales volumes within the revenue movement year-on-year from wholly owned businesses, excluding volume from acquisitions, on a constant currency basis 11. Pricing represents the impact of sales pricing within the revenue movement year-on-year from wholly owned businesses, excluding acquisitions, on a constant currency basis 12. Like-for-like branded revenue growth represents the sales growth/(decline) year-on-year on branded sales, excluding acquisitions, on a constant currency basis. Contract revenue is also disallowed. 13. Pro-forma revenue is defined as the revenue of Glanbia Ireland if the Dairy Ireland transaction had occurred on 3 January The average interest rate is defined as the annualised net finance costs (pre-capitalised borrowing costs) divided by the average net debt as at the reporting period 2017 Half Year Results Slide 27

28 2 Pro-forma impact of Dairy Ireland divestment HY 2017 HY 2016 'm Reported *Adjustment Pro-forma Reported *Adjustment Pro-forma Wholly owned Revenue continuing operations 1, , , ,077.9 Revenue discontinued operations (357.9) (356.9) - Total wholly owned 1, , , ,077.9 Share of JV&A s Revenue Revenue continuing Revenue discontinued 28.6 (28.6) (16.0) - Share of Dairy Ireland Revenue as a JV Total JV&A s Total Group Revenue 2, , , ,607.0 Wholly owned EBITA continuing EBITA discontinued 11.1 (11.1) (18.3) - Total wholly owned Share of JV&A s EBITA EBITA continuing EBITA discontinued 0.5 (0.5) (1.3) - Share of Dairy Ireland EBITA as a JV Total JV&A s Total Group EBITA Wholly owned continuing EBITA margin 12.5% 12.9% JV&A continuing EBITA margin 6.0% 4.7% Total Group EBITA margin 9.4% 10.3% 9.6% 10.2% Adjusted EPS 48.04c (1.95c) 46.09c 43.96c (3.25c) 40.71c *Adjustment to reflect Dairy Ireland as a Joint Venture from the beginning of FY 2016 On a full year pro-forma basis FY 2016 Adjusted EPS for continuing operations would have been 80.40c excluding software amortisation 2017 Half Year Results Slide 28

29 3 - Results of discontinued operations* 'm HY 2017 HY 2016 FY 2016 Revenue EBITA Intangible Asset amortisation (0.7) (1.2) (2.3) Operating Profit Finance costs (0.1) - (0.0) Share of JVA s Exceptional items (13.0) (0.8) (3.0) Profit Before Tax (2.3) Income tax on discontinued operations 0.7 (2.2) (3.6) Profit/(loss) from discontinued operations for the period, net of tax (1.6) *The disposal of 60% of Dairy Ireland and related assets was completed on 02 July As a result, Dairy Ireland reported results for the first half of 2017 are reclassified as discontinued operations (with 2016 comparatives changed accordingly) with all related Dairy Ireland assets and liabilities being reclassified on the Group Balance Sheet as held-forsale 2017 Half Year Results Slide 29

30 4 - Reconciliation of reported revenue to constant currency Total Group Revenue HY 2017 vs HY 2016 Continuing Operations HY 2017 HY 2016 Re-translated to constant currency HY 2016 Reported % growth -v- Prior year (reported) % growth -v- Prior year (*constant currency) Glanbia Performance Nutrition % 5.4% Glanbia Nutritionals % 9.0% Wholly owned 1, , , % 7.3% JV&A s % 23.2% Total Group 1, , , % 11.4% Discontinued Operations Wholly owned % 0.3% JV&A s % 78.8% Total Group 2, , , % 9.9% Constant currency reporting is used by the Group to eliminate the translational effect of foreign exchange on the Group s results. To arrive at the constant currency year-onyear 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. The average Euro US Dollar FX rate for the first half of 2017 was 1 = $1.083 (HY 2016: 1 = $1.116) Total Group has a number of strategically important equity accounted investees (Joint Ventures & Associates) which when combined with the Group s wholly owned businesses give an important indication of the scale and reach of the Group s operations. 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 Revenue comprises sales of goods and services of the wholly owned businesses to external customers net of value added tax, rebates and discounts 2017 Half Year Results Slide 30

31 5 - Reconciliation of reported EBITA to constant currency Total Group EBITA HY 2017 vs HY 2016 Continuing Operations HY 2017 HY 2016 Re-translated to constant currency HY 2016 Reported % growth -v- Prior year (reported) % growth -v- Prior year (constant currency) Glanbia Performance Nutrition % 0.2% Glanbia Nutritionals % 8.1% Wholly owned % 3.5% JV&A s % 83.8% Total Group (39.3%) (39.3%) Discontinued Operations Wholly owned (39.3%) (39.3%) JV&A s (61.5%) (61.5%) Total Group % 6.6% Constant currency reporting is used by the Group to eliminate the translational effect of foreign exchange on the Group s results. To arrive at the constant currency year-onyear 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. The average Euro US Dollar FX rate for the first half of 2017 was 1 = $1.083 (HY 2016: 1 = $1.116) Total Group has a number of strategically important equity accounted investees (Joint Ventures & Associates) which when combined with the Group s wholly owned businesses give an important indication of the scale and reach of the Group s operations. 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 EBITA is defined as earnings before interest, tax and amortisation excluding exceptional items 2017 Half Year Results Slide 31

32 6 Total Group EBITA margin EBITA margin HY 2017 Actual GPN GN Continuing operations wholly owned Continuing operations Joint Ventures & Associates Discontinued operations Total Group HY 2017 EBITA HY 2017 Revenue , ,047.9 EBITA margin 15.4% 10.0% 12.5% 6.9% 3.0% 9.4% EBITA margin is defined as EBITA before exceptional items as a percentage of the revenue of the wholly owned businesses. Total Group EBITA margin is defined as Total Group EBITA as a percentage of Total Group revenue 2017 Half Year Results Slide 32

33 7 Net Debt ratio & finance costs reconciliation Net debt : Adjusted EBITDA HY 2017 HY 2016 Financial liabilities Cash and cash equivalents (297.9) (94.9) Net debt Adjusted EBITDA (last 12 months) Net debt : Adjusted EBITDA Adjusted EBIT : Net finance costs HY 2017 HY 2016 Operating profit pre-exceptional Dividends received from Equity accounted investees Adjusted EBIT Net finance costs Adjusted EBIT : Net finance cost EBITDA & EBIT calculations are based upon financing agreements 2017 Half Year Results Slide 33

34 8 - Adjusted EPS HY V- HY 2016 Adjusted EPS Total Continuing and Discontinued Operations HY 2017 Reported HY 2016 (Re-presented) (*cc) HY 2016 Reported (Re-presented) Profit attributable to equity holders of the company Amortisation and impairment of intangible assets (excluding software amortisation and net of related tax) 3.8 million (2016: 3.6 million) Exceptional items (net of related tax) Adjusted net income Weighted average number of ordinary shares in issue 295,021, ,127, ,127,674 Adjusted Earnings per Share (cent) 48.04c 45.10c 43.96c *Constant currency reporting is used by the Group to eliminate the translational effect of foreign exchange on the Group s results. 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. The average Euro US Dollar FX rate for the first half of 2017 was 1 = $1.083 (HY 2016: 1 = $1.116) Adjusted EPS is defined as the net profit attributable to the equity holders of Glanbia plc, before exceptional items and intangible asset amortisation (excluding amortisation of software costs), net of related tax, divided by the weighted average number of ordinary shares in issue during the year During the current year the calculation of adjusted Earnings Per Share was amended to exclude the cost of software amortisation within the earnings calculation. The Group believes that adjusted EPS is a better measure of underlying performance than Basic EPS as it excludes exceptional items that are not related to on-going operational performance and intangible asset amortisation, which allows better comparability of companies that grow by acquisition 2017 Half Year Results Slide 34

35 Delivering better nutrition for every step of life s journey Glanbia plc Glanbia House Kilkenny, Ireland +