SIOBHÁN TALBOT GROUP MANAGING DIRECTOR
MARK GARVEY GROUP FINANCE DIRECTOR
CAGE CONFERENCE 2015 17 MARCH 2015
CAGE 2015
CAUTIONARY STATEMENT
This presentation 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. Due to the inherent uncertainties,
including both economic and business risk factors underlying such forward-looking
information, actual results may differ materially from those expressed or implied by
these forward-looking statements. The Directors undertake no obligation to update any
forward-looking statements contained in this presentation, whether as a result of new
information, future events, or otherwise.
www.glanbia.com 2
CAGE 2015
GLANBIA AT A GLANCE
LEADING GLOBAL PERFORMANCE NUTRITION AND INGREDIENTS GROUP
€245m +7.9%
€3.5bn +6.9%
TOTA
L G
RO
UP
REV
ENU
E TO
TAL
GR
OU
P E
BIT
A
77%*
55%*
Market Capitalisation
€5bn +
Employees
5,800
Countries
34
www.glanbia.com 3
*Contribution of Global Performance Nutrition and Global Ingredients
CAGE 2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
OUR EBITA MARGIN JOURNEY
www.glanbia.com 4
Focus on higher margin, lower volatility, value add sectors
Streamlining the business NUTRITION identified as growth focus
Organic investment, complementary JVs, and strategic M&A to unlock potential and build global market leading businesses
Sale of majority control of Irish dairy processing assets to our largest shareholder to create GII JV
3.4%
8.2%
CAGE 2015 www.glanbia.com 5
OUR BUSINESS MODEL
GLOBAL PERFORMANCE
NUTRITION
GLOBAL INGREDIENTS
… CAPTURED BY TWO GLOBAL GROWTH PLATFORMS
OUR END MARKETS PLAY INTO A NUMBER OF MEGATRENDS…
BENEFITS OF EXERCISE &
HEALTHY LIFESTYLE
FOOD TRACEABILITY
& TRUST
CONVENIENT & FUNCTIONAL
FOOD
HIGHER PROTEIN DIETS
#1 B2C GLOBAL SPORTS NUTRITION BRAND FAMILY
B2B INGREDIENTS PORTFOLIO WITH NUTRITION AT ITS CORE
GLOBAL PERFORMANCE NUTRITION
CAGE 2015
OUR BRAND PORTFOLIO
PROTEIN PRE- WORKOUT MUSCLE GAINERS & BUILDERS GENERAL HEALTH
GLOBAL SPORTS
NUTRITION BRAND FAMILY #1 GLOBAL
BUSINESS1 IN 23 COUNTRIES $1BN
1. Pro-forma 2014 revenue
www.glanbia.com 7
CAGE 2015 www.glanbia.com 8
WHERE WE PLAY
EMEA, 19%
Mass, 15%
GLOBAL MARKET 1
$10.1BN
US MARKET 3
$4.5BN
LAPAC, 18% N. America, 63%
BY REGION2
BY CHANNEL3
BY FORMAT3
GLOBAL
MARKET SHARE
12%
Other, 19% Specialty, 50%
Internet, 18%
RTD, 10% Caps & Tabs, 5%
Powder, 85%
DOUBLE DIGIT INTERNATIONAL
GROWTH (ex. US)
MID-SINGLE DIGIT GROWTH
IN THE US
1. Euromonitor 2014 (RSP) 2. Euromonitor 2013 (RSP) 3. Nutrition Business Journal 2013 (RSP)
CAGE 2015 www.glanbia.com 9
HOW WE WIN
2 Primary channel focus in US: - Large SPECIALTY channel - Fast growing INTERNET channel
3 Continue international roll-out: - Business builders in 22 countries ex-US - Tier 1 markets a priority
6 Innovation through insight - New categories, occasions and product
opportunities
5 Education & Advocacy: - Sports nutrition is an assisted sell
45m views
2.6m fans
200k+ followers
160+ sponsored
athletes
NPS*: 85
1 Leading brands:
4 Quality & Authenticity : - State-of-the-art in-house production - Rigorous quality assurance of product
NPS: 74 NPS: 81
sports nutrition
school
* Net Promoter Score (NPS) is a measure of consumer loyalty to brands ranging from -100 to 100
CAGE 2015 www.glanbia.com 10
INTERNATIONAL EXPANSION CASE STUDY
UNITED KINGDOM
2008 2009 2010 2011 2013 2014
UK sales out of USA Local distribution
18 month project to reformulate products to local regulations
Manufacturing transferred to local facility
Localised website & e-commerce capability
Established commercial team
BSN portfolio integration
BSN manufacturing transferred
Trade marketing team & category management approach
UK launch of Nutramino
POPULATION
64m MARKET SIZE
$464m
GROWTH IN SPORTS PARTICIPATION
12%
PER CAPITA SPEND
$7.3
READERS OF LEADING HEALTH MAGAZINE
13m
GLOBAL INGREDIENTS
CAGE 2015
GLOBAL SCALE AND LEADERSHIP POSITIONS
LEADING PRODUCER OF AMERICAN-STYLE CHEESE
INDUSTRY-LEADING INNOVATION PARTNER
CHEESE Countries with direct presence
21
$1.2bn B2B INGREDIENTS BUSINESS
NUTRITION IS AT OUR CORE
www.glanbia.com 12
INGREDIENT SYSTEMS & SOLUTIONS
BESPOKE SYSTEMS FOR CUSTOMERS ACROSS DAIRY;
NUTRITIONAL BARS, BEVERAGES & SUPPLEMENTS; BAKERY; GLUTEN-FREE; CEREAL
DAIRY INGREDIENTS
#1 PROVIDER OF WHEY BASED NUTRITIONAL SOLUTIONS
GLOBALLY
#2 PROVIDER OF CUSTOMISED MICRONUTRIENT PREMIX
SOLUTIONS GLOBALLY
4 SITES – US, EU & CHINA
MICRONUTRIENT PREMIXES
CAGE 2015
SPORTS NUTRITION
MAINSTREAM & FUNCTIONAL BEVERAGES
INFANT & CLINICAL
NUTRITION
BARS, SNACKS & CEREALS
HEALTH & WELLNESS
SUPPLEMENTS
FRESH DAIRY
QSRs & RETAIL
www.glanbia.com 13
WHERE WE PLAY
NUTRITIONAL & FUNCTIONAL
INGREDIENT SYSTEMS
SPECIALTY WHEY PROTEIN
BEVERAGE SOLUTIONS
SPECIALTY GRAINS
MICRONUTRIENT PREMIX
SOLUTIONS
CHEESE
NUTRITION
CAPABILITIES END MARKETS
NUTRITION
CAGE 2015
ADDING VALUE TO OUR INGREDIENT
PORTFOLIO BY MOVING UP THE
SOLUTIONS VALUE CHAIN
www.glanbia.com 14
HOW WE WIN
WE DELIVER A SUITE OF NUTRITIONAL INGREDIENT SYSTEMS & SOLUTIONS OPTIMISED FOR:
Consumer benefit
Customer requirements
Functional performance in key applications and formats
NUTRITION IS AT OUR CORE
VALUE CHAIN
LEADING THE INNOVATION AGENDA
IN CHEESE, DAIRY PROTEINS, AND NUTRITIONAL &
FUNCTIONAL BLENDS
INNOVATION
COLLABORATION WITH CUSTOMERS IN THEIR
NEW PRODUCT DEVELOPMENT
PROCESS SETS US APART
CUSTOMER CENTRIC
GLOBAL REACH AND PROPRIETARY
TECHNOLOGIES IN NUTRITIONAL INGREDIENTS
GLOBAL LEADERSHIP
STRATEGY OVERVIEW
CAGE 2015
OUR STRATEGY
www.glanbia.com 16
B2B
B2C GLOBAL PERFORMANCE NUTRITION
• Leverage protein ingredient expertise to develop functional and nutritional solutions for customers
• Extend market position in customised solutions
• Look to scale dairy and non‐dairy ingredients platforms
• Grow branded revenue globally ahead of market growth rates
• Drive growth in existing markets across current and new channels and consumer segments
• Acquire complementary brands
OUR GROWTH PLATFORMS OVERALL GROUP
1. Drive further market
leadership positions within
both global growth
platforms
2. Deliver strategic capital
investment programme
3. Acquire or partner with
complementary businesses
to scale our current
portfolio
4. Develop talent, culture and
values, in line with our
growing global scale
GLOBAL INGREDIENTS
FINANCE OVERVIEW
CAGE 2015 www.glanbia.com 18
STRATEGIC FINANCIAL TARGETS: 2014 – 2018
ORGANIC EARNINGS1
8% TO 10% ROCE
12% +
1. Five year adjusted earnings per share CAGR on a constant currency basis announced 12 March 2014.
• In first year through our five year guidance we delivered:
― 10.1% growth in adjusted EPS in 2014 on a constant currency basis
― 13.4% ROCE in 2014
• Guiding 9% to 11% growth in adjusted EPS, constant currency, for 2015
CAGE 2015 www.glanbia.com 19
FINANCIAL TRACK RECORD
Adjusted earnings per share 12.6% CAGR from 2000 to 2014
EBITA margin +480bps from 2000 to 2014
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
0c
10c
20c
30c
40c
50c
60c
70c
CAGE 2015
• €654m investment over last 4 years
― €310m on acquisitions
― €344m on capital expenditure
• €120m - €130m capex for 2015
• Disciplined approach to both M&A and capex decisions
• Demonstrated history of strong returns from investment decisions
• 2014 ROCE: 13.4%
www.glanbia.com 20
GROWTH THROUGH INVESTMENT
-
50
100
150
200
250
300
2011 2012 2013 2014
Bus. Sustaining
Strategic
Acquisitions
... coupled with consistent delivery of good ROCE
Significant strategic investment programme... €m
12.8%
14.1% 14.2% 13.4%
11.5%
12.0%
12.5%
13.0%
13.5%
14.0%
14.5%
2011 2012 2013 2014
*12.0% ROCE hurdle
CAGE 2015 www.glanbia.com 21
M&A CAPABILITY
• Strong track record of good returns from acquisitions
― Focus on global growth platforms
• Dedicated Corporate Development team with vast experience & sector knowledge
• Integration of 2014 acquisitions on track
PRE - 2014 2014
GLOBAL PERFORMANCE NUTRITION
Cost: €213 million & €108 million
Acquisition date: 2008 & 2011
GLOBAL INGREDIENTS
Cost: €50 million
Acquisition date: 2012
ASEPTIC SOLUTIONS
OPTIMUM NUTRITION & BSN
GLOBAL PERFORMANCE NUTRITION
Cost: €28 million
Acquisition date: January 2014
NUTRAMINO
GLOBAL PERFORMANCE NUTRITION
Cost: €121 million
Acquisition date: October 2014
ISOPURE
CAGE 2015 www.glanbia.com 22
STRATEGIC CAPITAL EXPENDITURE TO FUND FUTURE GROWTH
• Two major strategic capex projects currently underway
• Policy to keep business sustaining capex at level of depreciation
• Rigorous diligence of all large capex projects by internal investment committee
PRE - 2014 2015
GLOBAL INGREDIENTS
Cost: €22 million
Commissioned: Q4 2013
GLOBAL INGREDIENTS
Cost: €8 million
Commissioned: Q2 2013
SPECIALTY GRAIN PROCESSING FACILITY
CHEESE INNOVATION CENTRE
GLOBAL PERFORMANCE NUTRITION
Cost: $75 million
Commissioning: Q4 2015 (Phase II)
NEW GPN MANUFACTURING PLANT
GLOBAL INGREDIENTS
Cost: $85 million
Commissioning: Q4 2015
VALUE ADDED WHEY AND LACTOFERRIN EXPANSION
CAGE 2015 www.glanbia.com 23
FINANCIAL FLEXIBILITY
• Healthy balance sheet
• Net debt €510 million at 2014 year-end
• Net debt / adj. EBITDA < 2x
• Current committed debt facilities of €982 million
• Favourable debt maturity profile
• Strong support for equity financing
-150
-50
50
150
250
350
450
550
650
750
2015 2016 2017 2018 2019 2020 2021 2022
€350m Drawn
Favourable debt maturity profile €m
€110m cash
PDP €270m
RCF €712m
€362m Undrawn
CAGE 2015 www.glanbia.com 24
FREE CASH FLOW
209
153
88
65
32 13 8 (57)
(43)
(9)
0
50
100
150
200
250
300
2014 EBITA Depreciation Dividendsfrom JV&As
WorkingCapital
Net Interest& Tax
BusinessSustaining
CapEx
Other 2014 FCF 2013 FCF 2012 FCF
Note:
(i) 2014 EBITA reflects the wholly owned business
FREE CASH FLOW +74% IN 2014; NOW CONVERTING 73% OF EBITA TO CASH
FOCUSED ON WORKING CAPITAL €m
CAGE 2015
2014 FINANCIAL HIGHLIGHTS
www.glanbia.com 25
WHOLLY OWNED REVENUE
WHOLLY OWNED EBITA
WHOLLY OWNED EBITA %
ADJUSTED EPS
FREE CASH FLOW
ROCE
€2.5bn
€208.6m
8.2%
61.16c
€153m
13.4%
CONSTANT CURRENCY CHANGE
+6.4%
+11.1%
+30bps
+10.1%
+6.6%
+11.1%
+30bps
+10.3%
+74%
-80bps
CHANGE
SOLID FINANCIAL METRICS FOR 2014
CAGE 2015 www.glanbia.com 26
2015 OUTLOOK
• 2015 guidance of 9% to 11% in adjusted EPS, constant currency, with growth weighted towards 2H15
• Outlook for Global Performance Nutrition is positive and continued investment will ensure we remain in leading position in key markets and channels
• Expecting growth in Global Ingredients in 2015 with improvement in dairy market dynamics and solid underlying demand across key sectors
• Reiterate long term guidance to 2018 for organic growth of 8% to 10% in adjusted EPS, constant currency and a ROCE of 12% +
www.glanbia.com 27
QUESTIONS & ANSWERS
Liam Hennigan Head of Investor Relations Glanbia plc Glanbia House Kilkenny Ireland
Email: [email protected] Tel: +353 56 777 2308 Tel: +353 56 777 2200