Glanbia PLC · EURONEXT:GL9
Glanbia — H1 2012 Earnings Presentation
35 slides from Glanbia's earnings presentation, Aug 29, 2012
Slide 1: 2012 half year results
2012 half year results 29th August 2012 www.glanbia.com Leading global nutritional solutions and cheese group
Slide 2: Cautionary statement
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
Slide 3: Results overview
Results overview 3 www.glanbia.com
Slide 4: HY 2012 results overview
HY 2012 results overview • Solid performance in the context of exceptionally strong HY 2011 • Strong performance by Global Nutritionals • Weaker global dairy prices impact Dairy Ireland and International Joint Ventures & Associates • Revenue up 1.6% to €1.4 billion • EBITA up 6.5% to €107.2 million
Slide 5: HY 2012 results summary pre exceptional
HY 2012 results summary pre exceptional1 Constant Currency2 Reported HY 2012 HY 2011 Change HY 2012 Change Revenue3 €1,364.9m €1,342.9m + 1.6% €1,420.7m + 5.8% EBITDA €124.1m €117.0m + 6.1% €131.2m + 12.1% EBITA €107.2m €100.7m + 6.5% €113.8m + 13.0% EBITA margin 7.9% 7.5% + 40 bps 8.0% + 50 bps Ope
Slide 6: HY 2012 Total Group divisional results
HY 2012 Total Group divisional results HY 2012 revenue ↑ 1.1% HY 2012 EBITA ↑ 1.5% €1.6 billion €118.4 million 43% EBITA Margin 42% 65% 25% 4.4% EBITA Margin 15% 11.2% 10% EBITA Margin 4.6% US Cheese & Global Nutritionals: €691.3 million revenue ↑ 8.6%; €77.3 million EBITA ↑ 16.9% Dairy Ireland: €67
Slide 7: HY 2012 Total Group revenue analysis
HY 2012 Total Group revenue analysis US Cheese & Global Nutritionals HY 2011 €636.4m Volume 4% Total Group revenue Price 5% HY 2012 €691.3m HY 2011 €1.6bn Volume - ↑ 9% Price 1% HY 2012 €1.6bn Dairy Ireland JVs & Associates HY 2011 €706.5m HY 2011 €246.8m ↑ 1% Volume (4%) Volume 1% Price (1%) Price
Slide 8: HY 2012 Total Group EBITA analysis
HY 2012 Total Group EBITA analysis Total Group EBITA ↑ 1.5% 140 +€11.2m -€4.7m -€4.8m 120 €116.7m €118.4m 100 + Positive organic - Weaker global - Weaker global volume growth dairy markets dairy markets 80 - Higher whey + Efficiency and + Positive volume input costs for cost reduction growth 60 PN p
Slide 9: HY 2012 US Cheese & Global Nutritionals
HY 2012 US Cheese & Global Nutritionals US Cheese Revenue ↓ EBITA ↓ EBITA margins ↑ • Positive volume growth driven by foodservice and export demand • Lower average market prices driven by higher milk output and cheese production • Ongoing efficiency program, Glanbia Performance System, supported ma
Slide 10: HY 2012 Dairy Ireland
HY 2012 Dairy Ireland Dairy Ingredients Revenue ↓ EBITA ↓ EBITA margins ↓ • Decline in global dairy markets due to higher milk production • Margins impacted by lag in reflecting lower market prices in milk cost • Efficiency and cost management programs provide margin benefit • Improvement in sentime
Slide 11: HY 2012 Joint Ventures & Associates
HY 2012 Joint Ventures & Associates Southwest Cheese: USA Revenue ↓ EBITA ↓ EBITA margins ↓ • Lower US Cheese markets driven by higher milk output • Revenues lower as a result but volume growth positive driven by foodservice and exports • Margin impact partially offset by strong operational performa
Slide 12: HY 2012 Financing KPIs
HY 2012 Financing KPIs Results as reported HY 2012 HY 2011 Change EBITDA €131.2m €117.0m + €14.2m Net debt €560.8m €569.1m - €8.3m Net debt/Adjusted EBITDA 2.3 times 2.5 times - 0.2 times Return on capital employed 12.7% 13.0% - 30 bps 1 Adjusted EBITDA for the purpose of financing ratios reflects G
Slide 13: FY 2012 outlook
FY 2012 outlook “The overall outlook for the remainder of the year is positive. Global dairy markets have stabilised and this is expected to underpin a steady performance in Dairy Ireland, US Cheese and International Joint Ventures in the second half. Growth within Global Nutritionals is forecast to
Slide 14: Vision and strategy
Vision and strategy 14 www.glanbia.com
Slide 15: Clear vision and growth strategy
Clear vision and growth strategy TO BE THE LEADING GLOBAL NUTRITIONAL SOLUTIONS AND CHEESE GROUP STRATEGIC PRIORITIES 1 2 3 4 Align to key Effective risk Operational Science-based growth and capital excellence innovation customers and management markets 15 www.glanbia.com
Slide 16: 2012 business focus areas: US Cheese & Global Nutritionals
2012 business focus areas US Cheese & Global Nutritionals • $60 million acquisition of US-based Aseptic Deliver nutritionals acquisition Solutions by Ingredient Technologies Complete planned facilities expansion in • €20 million leading-edge plant commissioned in Customised Premix Solutions German
Slide 17: 2012 business focus areas: Dairy Ireland
2012 business focus areas Dairy Ireland Clarity on the strategic approach to • Proposed 40:60 joint venture announced today with opportunity post abolition in 2015 of the Glanbia Co-operative Society Limited in relation to Ongoing current EU milk quota regime Irish dairy progressing Deliver whey exp
Slide 18: Glanbia proposals announced today
Glanbia proposals announced today 18 www.glanbia.com
Slide 19: Summary of proposals
Summary of proposals Proposed new dairy Proposal to reduce Society processing joint venture shareholding to 41.4% • Strategic joint venture in relation to • Distribution (spin-out) of 7% of issued Dairy Ingredients Ireland business unit share capital of plc to Society members • 60% Society : 40% plc
Slide 20: Joint venture overview
Joint venture overview Business Overview • New entity to be known as Glanbia Ingredients Ireland (‘GII’). Business consists of Ballyragget and Virginia processing plans, 45% share of Corman Miloko Joint Venture and the 23% Glanbia shareholding in the Irish Dairy Board • 2011 revenue €738 million; 20
Slide 21: Easy organisational transition
Easy organisational transition • Fully aligned with Glanbia’s existing Glanbia plc organisation and business model • Business unit moves from Dairy Ireland US Cheese & Joint Ventures division to Joint Ventures & Associates Dairy Ireland Global & Associates Nutritionals • Standalone business within G
Slide 22: Dairy Ingredients valuation overview
Dairy Ingredients valuation overview Fixed Discount Net fixed Pension assets on assets assets €74 €16m €110m €20m million • Agreed fixed asset • In line with Pension Board • Society 60% equates discount as part of the approved funding plan to €44.5 million joint venture transaction • IAS 19 pension
Slide 23: Joint venture - Glanbia plc financial assessment
Joint venture - Glanbia plc financial assessment Due from Society for 60% share of JV €34.3m Cash amount paid by Society to plc (funded by 3% share sale) Illustrative example using closing share price of €5.91 of 24 August 2012 €10.2m Loan from the plc to the Society to fund remainder of considerati
Slide 24: Share distribution and sale
Share distribution and sale • Separately but related to the joint venture proposal, the Society is seeking approval to reduce its shareholding in Glanbia to 41.4% as follows: • Distribute 7% of the share capital to Society members • Dispose of 3% (in addition to the 3% disposal under the joint ventu
Slide 25: Conditions for completion and timetable
Conditions for completion and timetable Society member approval • Joint venture proposal subject to 50% approval • Share distribution and sale requires 75% approval in two stage voting process • If the joint venture proposal is not approved, neither transaction will proceed • The €150 million green
Slide 26: Compelling proposition for both parties
Compelling proposition for both parties Plc Society • Clarifies the Group’s strategy and • Underpins the ability to drive future approach to Irish milk processing growth in dairy processing for members expansion • Clarifies ownership structure of critical • Allows the Group to continue with its asse
Slide 27: Summary and outlook
Summary and outlook 27 www.glanbia.com
Slide 28: Summary & outlook
Summary & outlook • Overall outlook positive and well positioned to continue growth • Global Nutritionals growth underpinned by favourable market trends and ongoing focus on innovation. • Global dairy markets have stabilised providing the base for a more stable performance in the second half • Well
Slide 29: Supplementary information
Supplementary information 29 www.glanbia.com
Slide 30: Market commentary
Market commentary Global dairy markets • Progressively weaker market pricing Market is expected to be more stable reflecting • Significant growth in global milk production continued positive demand growth and the impact of recent drought conditions in the US on global supply. • Continued positive gl
Slide 31: Segmental analysis – on a constant currency basis
Segmental analysis – on a constant currency basis HY 2012(1) HY 2011 EBITA EBITA Revenue EBITA(2) Margin Revenue EBITA Margin €m €m €m €m US Cheese & Global Nutritionals 691.3 77.3 11.2% 636.4 66.1 10.4% Dairy Ireland 673.6 29.9 4.4% 706.5 34.6 4.9% Group(3) 1,364.9 107.2 7.9% 1,342.9 100.7 7.5% JVs
Slide 32: Segmental analysis – as reported
Segmental analysis – as reported HY 2012(1) HY 2011 EBITA EBITA Revenue EBITA(2) Margin Revenue EBITA Margin €m €m €m €m US Cheese & Global Nutritionals 747.1 83.9 11.2% 636.4 66.1 10.4% Dairy Ireland 673.6 29.9 4.4% 706.5 34.6 4.9% Group as reported(3) 1,420.7 113.8 8.0% 1,342.9 100.7 7.5% JVs & As
Slide 33: HY 2012 summary cash flow
HY 2012 summary cash flow HY 2012 HY 2011 Change €m €m €m EBITDA pre exceptional 131.2 117.0 14.2 Working capital movement (150.3) (127.2) (23.1) Net interest and tax paid (18.9) (13.0) (5.9) Business sustaining capital investment (15.2) (10.0) (5.2) Other (6.2) (7.8) 1.6 Free cash flow (59.4) (41.0
Slide 34: HY 2012 summary balance sheet
HY 2012 summary balance sheet HY 2012 HY 2011 Change €m €m €m Property, plant and equipment 408.4 363.1 45.3 Investments 85.7 83.5 2.2 Intangible assets 471.7 423.5 48.2 Non-current receivables 14.9 16.9 (2.0) Deferred tax/capital grants (97.8) (88.6) (9.2) Working capital 382.3 302.6 79.7 Retiremen
Slide 35: www.glanbia.com
glanbia www.glanbia.com ee’