CAGE 2014 www.glanbia.com 1 www.glanbia.com
GLANBIA
17 March 2014
CAGE CONFERENCE 2014
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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.
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GLANBIA OVERVIEW
Market Capitalisation
€3.3 billion
2013 Revenue
€3.3 billion Employees
5,202
LEADING GLOBAL PERFORMANCE NUTRITION AND INGREDIENTS GROUP
Countries of Operation
29 Export Markets
130+
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TOTAL GROUP REVENUE
SEGMENTAL OVERVIEW
€3.3bn 53%
TOTAL GROUP EBITA
€227m 76%
Branded sports nutrition:
• ON
• BSN
• ABB
• Nutramino
• Consumer Products
• Agribusiness
• Glanbia Ingredients Ireland
• Southwest Cheese
• Glanbia Cheese
• Nutricima
GLOBAL PERFORMANCE
NUTRITION
DAIRY IRELAND
JOINT VENTURES & ASSOCIATES
GLOBAL INGREDIENTS
• US Cheese
• Ingredient Technologies
• Customised Solutions €1,075m* €655m*
€652m* €901m*
* Revenue
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OUR MARKET OPPORTUNITY
MARKET BACKDROP
DEMAND FOR FOOD QUALITY &
TRACEABILITY
GROWING GLOBAL MIDDLE CLASS ADOPTING WESTERN DIETS
ADVANCEMENTS IN NUTRITION SCIENCE & FOOD TECHNOLOGIES
GLOBAL POPULATION GROWTH & FOOD SUPPLY CONCERNS
RISING HEALTHCARE
COSTS
INCREASED FREQUENCY &
INTENSITY OF EXERCISE IN MODERN LIFESTYLES
MACRO TRENDS
MACRO TRENDS
EVOLVING CONSUMER MARKETS
GROWTH OF MULTIPLE NUTRITION SEGMENTS
INCREASING DEMAND FOR HIGHER NUTRIENT DENSITY IN MAINSTREAM DIETS
INCREASING UNDERSTANDING OF SYNERGISTIC BENEFITS OF EXERCISE AND DIETS
INCREASING DEMAND FOR SUPPLEMENTS AND NATURAL PREVENTION
GROWING PREVALENCE OF SNACK-BASED MEAL REPLACEMENT
DEMAND FOR INGREDIENT AUTHENTICITY AND TRACEABILITY
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OUR MARKET OPPORTUNITY
OUR TWO GROWTH PLATFORMS
B2B B2C GLOBAL INGREDIENTS
GLOBAL PERFORMANCE NUTRITION
• We will harness increased penetration of sports nutrition category through brand strength, breadth of product range and global presence.
• We are trusted leaders in the specialty retail and online channels where new consumers are engaging with the category.
• We are ideally positioned to address demand for higher nutrient density and cleaner labels.
• Our portfolio of nutritional ingredients and technologies enables customers to incorporate our solutions into multiple nutrition categories, channels and formats.
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GLOBAL PERFORMANCE NUTRITION
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MARKET PROFILE
US MARKET BY CHANNEL GLOBAL MARKET BY REGION US MARKET BY FORMAT
LAPAC, 10%
EMEA, 25%
US, 65%
Other, 18% Specialty,
50%
Internet, 16%
Mass, 16%
Caps & Tabs, 6%
Powder, 85%
RTD, 9%
GLANBIA FOCUS
US largest market but strong and fast growing
presence in EMEA/LAPAC
Primary focus on Specialty and Internet
Primary focus on Powder across protein,
pre-workout, muscle gainers and builders
$5.1bn $3.3bn $3.3bn
1.Market sizes are on an MSP basis 2.Source: by region – internal; channel & format - New Business Journal
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INTERNATIONAL EXPANSION
• 30% + of revenues ex-US
• Proven and repeatable roll-out model
• In-market presence in 19 countries currently (from 0 in 2009)
• Strong affinity for US brands
• Global marketing strategy tailored for each market
• Significant investment in compliance with local regulations
CASE STUDY: AUSTRALIA
2011: country manager appointed
2010-2013: 54% revenue CAGR
2014: #2/#3 market position
2014: 13-strong sales presence
8
12
19
2011 2012 2013
IN-MARKET PRESENCE
# OF COUNTRIES
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DEEP CONNECTION WITH OUR CONSUMER
• Tailor made marketing model
• Lead through engagement
• Connect on consumer’s terms
• Major online and social presence
85
74
ONLINE PRESENCE
Fans
1.4m+ Views
18.4m+ Followers
123k+ Unique visitors
4.1m per annum
NET PROMOTER SCORE
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UNIQUE COMPETITIVE ADVANTAGE
AS A BUSINESS AS A BRAND PORTFOLIO
First and fast mover
Entrepreneurial culture
Vertically integrated scale
Market leading partnerships
Repeatable business model
Corporate parent
Wide-user base
Key categories
Quality and compliance
Innovative
Trusted, high NPS score
Strong emotional connection
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GLOBAL INGREDIENTS
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GLOBAL INGREDIENTS
Ingredient Technologies
Customised Solutions
US Cheese
• B2B ingredients
• €1.1bn revenue
• Three distinct but related business units
• Large scale integrated cheese and whey manufacturing
• Value-added dairy & non-dairy ingredients and premix solutions
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GLOBAL INGREDIENTS
LARGEST MANUFACTURER OF AMERICAN STYLE CHEDDAR CHEESE
US CHEESE
BUSINESS MODEL
END MARKETS
• Large scale efficient operator
• Focus on operational excellence
• Market leader in innovation
• Retail, foodservice, ingredients & exports
• Steady market growth profile
ROLE OF JOINT VENTURES
• US Cheese commercialises all output from Southwest Cheese JV
• Future expansion likely through JV model
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GLOBAL INGREDIENTS
INGREDIENT TECHNOLOGIES
SCIENCE-LED NUTRITIONAL AND FUNCTIONAL INGREDIENT SOLUTIONS PROVIDER
INGREDIENT FOCUS
HIGH GROWTH END MARKETS
• Dairy-based ingredients
• Specialty grain ingredients
• Aseptic beverages
• Healthy ageing, sports nutrition, infant formula, nutrition bars & beverages,
• Developed & developing markets
INNOVATION
• Customer collaboration
• Proprietary technologies
• Market insights
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GLOBAL INGREDIENTS
CUSTOMISED SOLUTIONS
#2 GLOBAL PROVIDER OF CUSTOM-BLENDED PREMIXES
BUSINESS MODEL
END MARKETS
• Blends vitamins & minerals according to exact specifications
• Strong global footprint with facilities in the US, Germany & China
• Range of end markets with differing growth profiles
• Infant nutrition, beverages, sports nutrition, dairy, supplements
KEY USPs
• Customer service
• Reliability
• Track record
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STRATEGY OVERVIEW
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OUR VALUE CHAIN
B2C
B2B
CONSUMER BRANDS
SOLUTIONS & SYSTEMS
SPECIALTY INGREDIENTS
BASE INGREDIENTS
Optimum Nutrition
BSN
ABB
Nutramino
Dairy-based protein systems
Vitamin & mineral premixes
Specialty grain systems
Aseptic beverages
Cheese
Base whey
Other dairy ingredients
High protein dairy ingredients
Specialty milk minerals/proteins
Specialty grains
OUR BRANDS
OUR PRODUCTS
ADDING VALUE TO OUR PORTFOLIO BY MOVING UP THE VALUE CHAIN IS KEY TO OUR STRATEGY
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OUR STRATEGY
1. Sustain current and drive further
market leadership positions
within both B2B and B2C 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
B2B
B2C
GLOBAL INGREDIENTS
GLOBAL PERFORMANCE NUTRITION
• Sustain leadership position in American-style cheddar cheese;
• Leverage whey expertise and add to protein ingredients and systems;
• Strengthen market position in premix solutions; and
• Look to scale dairy and non-dairy ingredients.
• Grow in US specialty and internet channels;
• Focus on high-growth markets and continue with rapid international expansion;
• Venture into new markets, channels and consumer segments; and
• Enhance capabilities in marketing, sales, supply chain and product innovation.
OVERALL GROUP OUR GROWTH PLATFORMS
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FINANCE OVERVIEW
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INVESTMENT AND RETURNS
• €390m investment over last 3 years incl. acquisitions
• €120m for 2014 reflecting range of attractive opportunities
• Disciplined approach to both M&A and capex spending
• Strong track record of returns delivery
• FY2013 ROCE: 14.2%
0
50
100
150
200
2010 2011 2012 2013
Bus. Sustaining Strategic Acquisitions
Significant investment programme.... €m
8.0%
10.0%
12.0%
14.0%
16.0%
2010 2011 2012 2013
... with strong track record for ROCE
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GLOBAL PERFORMANCE NUTRITION
Cost: €50 million
Commissioning: Q2 2014 (Phase 1)
INGREDIENT TECHNOLOGIES
Cost: €22 million
Commissioned: Q4 2013
US CHEESE
Cost: €8 million
Commissioned: Q2 2013
CAPEX & ACQUISITION HIGHLIGHTS
NEW PRODUCTION PLANT
SPECIALTY GRAIN PROCESSING FACILITY
CHEESE INNOVATION CENTRE
STRONG TRACK RECORD FOR CAPEX & M&A
GLOBAL PERFORMANCE NUTRITION
Cost: $315 million
Acquisition date: 2008
GLOBAL PERFORMANCE NUTRITION
Cost: $144 million
Acquisition date: 2011
INGREDIENT TECHNOLOGIES
Cost: $60 million
Acquisition date: 2012
ASEPTIC SOLUTIONS
OPTIMUM NUTRITION
BSN
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0
100
200
300
400
500
2014 2015 2016 2017 2018 2019 2020 2021
€264m Undrawn
FINANCIAL FLEXIBILITY
• Strong balance sheet
• Net debt €374 million at Dec-13
• 1.7x net debt / adj. EBITDA
• Current committed debt facilities of €744 million
• Favourable debt maturity profile
• Potential for equity financing
Favourable debt maturity profile €m
1.5x
2.0x
2.5x
3.0x
2008 2009 2010 2011 2012 2013
Net debt / EBITDA
€39m
€467m
€238m
€203m Drawn
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HISTORIC FINANCIALS HIGHLIGHTS
0.00
10.00
20.00
30.00
40.00
50.00
60.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Adjusted earnings per share 2000-2013 CAGR 12.8%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
EBITA margin +450bps from 2000-2013
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2013 FINANCIAL HIGHLIGHTS
TOTAL GROUP REVENUE
TOTAL GROUP EBITA
TOTAL GROUP EBITA %
ADJUSTED EPS
FREE CASH FLOW
ROCE
€3.3bn
€226.7m
6.9%
55.46c
€87.6m
14.2%
CONSTANT CURRENCY CHANGE
+10.5%
+9.2%
-10bps
+11.9%
+8.0%
+5.6%
-20bps
+8.0%
+35.2%
+10bps
CHANGE
GOOD TOP AND BOTTOM LINE GROWTH
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2013 FINANCIAL HIGHLIGHTS
3,038
3.0%
3.8%
0.7%
3.0%
3,283
-2.5%
3,000
3,050
3,100
3,150
3,200
3,250
3,300
3,350
3,400
FY12 GlobalPerformance
Nutrition
GlobalIngredients
Dairy Ireland JV&As FX FY13
TOTAL GROUP REVENUE GROWTH +10.5%*
215
7.5%
3.7%
0.9%
227
-2.9%
-3.6%
200
205
210
215
220
225
230
235
240
245
FY12 GlobalPerformance
Nutrition
GlobalIngredients
Dairy Ireland JV&As FX FY13
TOTAL GROUP EBITA GROWTH +9.2%*
* Constant currency
€m €m
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PERFORMANCE OUTLOOK
ORGANIC EARNINGS1
8% TO 10% RETURN ON CAPITAL EMPLOYED
12% +
1. Five year adjusted earnings per share CAGR on a constant currency basis.
• Overall positive outlook for 2014
• Underpinned by our two global growth platforms
• In particular Global Performance Nutrition
• Guiding 8% to 10% growth in adjusted EPS on a constant currency basis
LONG TERM FINANCIAL TARGETS 2014 OUTLOOK
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Q&A
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APPENDIX
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SEGMENTAL OVERVIEW
1. Glanbia disposed of a 60% interest in Glanbia Ingredients Ireland Limited (“GIIL”) in November 2012. GIIL is now a 40% associate of the Group. To aid comparability, 2012 results have been restated to show GIIL as an associate for the full year.
2013 Constant currency change
€m Revenue EBITA Margin Revenue EBITA Margin
Global Performance Nutrition 655.3 70.6 10.8% +15.7% +27.9% +100 bps
Global Ingredients 1,074.6 102.0 9.5% +11.5% +8.1% -30 bps
Dairy Ireland 652.2 15.1 2.3% +3.4% -29.1% -110 bps
Total wholly owned 2,382.1 187.7 7.9% +10.3% +10.0% No change
Joint Ventures & Associates1 900.5 39.0 4.3% +11.2% +5.3% -30 bps
Total Group 3,282.6 226.7 6.9% +10.5% +9.2% -10 bps
STRONG PERFORMANCE IN GLOBAL GROWTH PLATFORMS
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SUMMARY INCOME STATEMENT
2013 results summary pre exceptional Reported currency Constant currency
€m 2013 2012 Change Change
Revenue 2,382.1 2,211.8 +7.7% +10.3%
EBITA 187.7 176.7 +6.2% +10.0%
EBITA margin 7.9% 8.0% -10bps No change
- Amortisation of intangibles (21.0) (19.9)
- Net finance costs (23.0) (20.4)
- Share of results of JV&As1 26.5 12.1
- Income tax (24.7) (25.5)
Profit for the year 145.5 123.0
Adjusted Earnings per Share2 55.46c 51.34c +8.0% +11.9%
1. Glanbia disposed of a 60% interest in GIIL in November 2012. GIIL is now a 40% associate of the Group. The share of results of JV&As figure for 2012 includes just one month of GIIL. The 11 months prior to the sale were shown in discontinued items and are not included in the table above.
2. For comparative purposes, the 2012 adjusted earnings per share have been adjusted to show GIIL as an associate for the full year.
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2013 SUMMARY CASH FLOW
€m 2013 2012
EBITDA 214.6 201.5
Dividends from Joint Ventures & Associates 10.9 13.8
Working capital movement (39.9) (59.1)
Net interest and tax paid (55.8) (48.1)
Business sustaining capital expenditure (35.7) (30.1)
Other outflows (6.5) (13.2)
Free cash flow from continuing operations 87.6 64.8
Loans repaid by / (to) Joint Ventures & Associates 7.2 (3.3)
Strategic capital expenditure / acquisitions (76.5) (89.2)
Disposals 8.5 26.6
Restructuring costs (3.0) (6.5)
Equity dividends (27.9) (25.3)
Net cash flow from continuing operations (4.1) (32.9)
Cash flow from discontinued operations - 122.8
Cash flow pre currency exchange/fair value adjustments (4.1) 89.9
Currency exchange / fair value adjustments 6.3 13.8
Cash flow for the year 2.2 103.7
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2013 SUMMARY BALANCE SHEET
€m 2013 2012
Property, plant and equipment 374.0 309.5
Investments 152.9 135.2
Intangible assets 454.5 473.0
Non-current receivables 9.4 16.8
Deferred tax/capital grants (75.8) (73.7)
Working capital 225.7 201.3
Retirement benefit obligations (78.0) (98.1)
Provisions (44.8) (42.8)
1,017.9 921.2
Net debt (374.4) (376.6)
Shareholders equity 643.5 544.6
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JOINT VENTURES & ASSOCIATES RECONCILIATION
Joint Ventures & Associates - Reconciliation of EBITA to share of results
€m 2013 2012
EBITA of Joint Ventures & Associates 39.0 37.9
Reversal of pro-forma adjustment for GIIL1 - (14.8)
Reported EBITA 39.0 23.1
Amortisation (0.3) -
Finance costs (4.2) (5.3)
Income tax (8.0) (5.7)
Share of results as reported in the Income Statement 26.5 12.1
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Glanbia plc Glanbia House Ring Road Kilkenny Ireland
Email: [email protected] Tel: +353 56 777 2200