Glanbia navigated Covid-19 well in 2020, positioned for growth in 2021

Kilkenny People reporter

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Siobhán Talbot, GLanbia Group Managing Director

Glanbia plc, the global nutrition group, announces its preliminary results for the 2020 financial year ended 2 January 2021 (“Full year 2020”, “FY 2020”, “2020”).  

 

Summary

* Group navigated Covid-19 well with the business portfolio delivering a resilient performance in 2020;
* Solid top line with revenue of €3,823.1 million (2019: €3,875.7 million), up 0.6% constant currency on prior year (down 1.4% reported). Like-for-like* revenue grew 1.8% constant currency on prior year;
* Strong operating cash flow (“OCF”) of €334.8 million (2019 €279.9 million); 122.4% cash conversion rate;
* Robust performance from Glanbia Nutritionals (“GN”) which drove like-for-like revenue growth of 10.0% constant currency on prior year;
* Glanbia Performance Nutrition (“GPN”) impacted by Covid-19 restrictions, in particular in Q2, delivered like-for-like revenue decline of 13.3%, constant currency;
* Pre-exceptional EBITA of €209.6 million in full year 2020 (FY 2019: €276.8 million) was down 22.6% constant currency (down 24.3% reported); primarily related to challenges associated with Covid-19 in GPN in Q2; improving trends resulted in delivery of €124.6 million EBITA in the second half 2020;
* Joint Ventures (“JVs”) delivered a strong performance with reported share of profits up €13.0 million to €61.6 million;
* Adjusted earnings per share (“EPS”) of 73.78 cent (2019: 88.10 cent) was down 14.9% constant currency (down 16.3% reported);
* Profit after tax of €143.8 million (2019: €180.2 million); exceptional items after tax of €31.5 million (2019: €34.6 million);
* Basic EPS of 48.72 cent (2019: 61.04 cent);
* Group in a strong financial position with net debt reduced by €120.4 million versus prior year to €493.9 million; Net debt to adjusted EBITDA ratio of 1.70 times;
* Share buyback programme of up to €50 million successfully launched in Q4 2020 and ongoing in 2021;
*Total dividend maintained at 2019 levels representing a payout ratio of 36.1% ahead of target range of 25% to 35% due to strong cash flow. Recommended final dividend per share of 15.94 cent, total 2020 dividend 26.62 cent;
* Strong progress on the Group’s ESG agenda; Significant changes to Board composition proposed to facilitate increased Board diversity with a Group-wide Diversity and Inclusion strategy launched; and on the Environmental agenda, targets are now in place for the reduction of carbon emissions;
* Positive outlook; in FY 2021 the Group expects to deliver 6% to 12% growth in adjusted EPS, constant currency, driven by wholly-owned businesses, GPN and GN.
 

Commenting, Siobhán Talbot, Group Managing Director, said: “I am exceptionally proud of how our people responded to the many challenges of Covid-19. Throughout the pandemic, we lived our purpose and our values, delivering essential, nutritious food during the most challenging of circumstances and proving the resilience of our business. We delivered on our priorities of protecting our people, continuing the supply of food and maintaining our strong financial position. We kept our operations running safely with the aid of enhanced health and safety measures. Our business portfolio delivered a robust operating performance supported by our swift and decisive actions which resulted in improving trends across the Group in the second half of the year. Our focused approach to liquidity resulted in cash conversion of over 122% and our financial position has improved materially with net debt reducing by over €120 million during the course of 2020.

 

"We also maintained delivery of our strategic agenda by making significant progress on GPN’s transformation programme; keeping all major projects on track, which included the completion of construction of two new large-scale JV plants; completing the Foodarom acquisition in GN; and launching a €50 million share buyback programme to enhance shareholder returns whilst maintaining our dividend level. This pandemic is by no means over and we remain vigilant in managing the risks associated with it but we are confident that earnings growth will be restored in 2021.

 

"In 2020 like-for-like wholly-owned revenues grew by 1.8%, on a constant currency basis. GN delivered a good performance versus prior year as the majority of its end-market demand was sustained throughout 2020 and it continued to execute its strategic growth agenda. GPN was impacted by Covid-19 related restrictions which caused significant disruption to International markets and the North American specialty and distributor channels. However we maintained our focus on the key transformation programme with revenue and margin trends both improving in the second half of the year. Our full year adjusted EPS was down 14.9% on a constant currency basis versus prior year as a good start to 2020 was severely impacted by Covid-19 in the second quarter but improved market conditions and focused actions drove a sequential improvement in earnings in the second half of 2020.

 

"Today we also outline the evolution of our sustainability strategy, “Pure Food + Pure Planet”. As part of this strategy, we are signing up to Science Based Targets and aiming to reduce manufacturing emissions by 30% and supply chain emission intensity by 25% by 2030, while achieving net zero carbon emissions no later than 2050. We also launched our diversity and inclusion strategy which will continue to foster a strong and inclusive culture in our organisation.

 

"We expect the disruptive impact of Covid-19 will abate during the course of 2021 and based on this we expect adjusted EPS to increase by 6% to 12% on a constant currency basis in FY 2021 with growth driven by both wholly-owned businesses of GPN and GN. We anticipate that 2021 will see consumers continue to focus on health and wellbeing: prioritising functional nutrition including immunity enhancing products; maintaining a healthy weight; and supplementing protein-rich foods to support performance and healthy lifestyle goals. This positions Glanbia very well for the future given our core focus on nutrition, health and wellbeing.”