Glanbia Plc Ord

Good morning and welcome to the Glanbia PLC 2021 Full Year Results Call with Siobhan Talbot, Group Managing Director and Mark Garvey, Group Finance Director. Today's conference is being recorded and at this time I'd like to turn the conference over to Liam Hennigan, Group Director of Strategic Planning and Investor Relations. Please go ahead.

Thank you. Good morning and welcome to today's call. During the call, the directors may make forward-looking statements. These statements have been made by the directors in good faith based upon the information available to them up to the time of their approval of the full year 2021 release and the 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 information made on today's call. Good morning and thank you all for joining today's call.

On the call today I will outline a summary of our financial performance and strategic execution during 2021 as well as the trends we are seeing so far in 2022. Mark will cover the finances and then I'll conclude with an update on our strategy and outlook after which we'll be very happy to take any questions. So turning then to our performance in 2021. When I spoke to you this time last year, we expected to grow our adjusted earnings per share in a range of 6% to 12%, constant currency, based on what we were seeing at that time. As we moved through the year, our strong delivery led us to upgrade our guidance and we're pleased to ultimately report results much stronger than those original expectations across all of our key metrics of revenue growth, margin and, of course, cash conversion. Adjusted EPS for 21 has grown on a constant currency basis by 23.9% for continuing operations. That obviously excludes the impact of the Glanbia Ireland joint venture, which is now held for sale. Including the impact of the joint venture, our adjusted EPS grew by 22.1% constant currency. This result was driven by strong growth in both of our two key platforms of both GPN and GNNS. with GPN increasing like-for-like revenues by 15.9%, with branded like-for-like growing 18.3%, and GN Solutions increasing like-for-like revenue by 17.3%. Through the year, we continued to focus strongly on our financial discipline and continued an excellent cash performance for the year. Our operating cash flow conversion was over 100%, and we put that cash to good use. investing across the business, making some acquisitions, and also delivering returns to our shareholders with a 10% increase in our final dividend, as well as returning over 90 million in share buybacks through the year. 2022 has started very well, and we expect further revenue and earnings growth this year. Before I get into the outlook, I'd like to speak with you first about our strategic execution on 21, because that provides important context for our 22 plans. 21 was overall a very busy year for the group, and while we were navigating COVID, we also stayed very focused on delivering our strategic imperative. The GPN transformation project made significant progress through the 21 year, with the project over-delivering in terms of top line and margin momentum versus its original business case. This key project, which commenced in the latter part of 19, and since then is well on track to deliver over the 200 basis point of net margin benefits that we spoke to with the growth savings being reinvested as planned in higher brand marketing investment. The project, as we've mentioned previously, has a broad range of initiatives focused on both driving revenue momentum and indeed efficiency. From a revenue perspective, it has enabled brand momentum. It has driven focused revenue growth management opportunities, including significant pricing actions with a number over the last 18 months. and also realigned our operating model, and indeed talent, to match our growth agenda. The range of projects to drive efficiencies was also very broad. It included a rationalisation of over a third of SKUs from the portfolio, an exit of our contract business in North America, such that all of our business is now branded, really, in GPM, significant realignment of our routes to markets in regions outside North America, and a consolidation of our supply chain activity, particularly a consolidation of the North American manufacturing footprint. The strong delivery on this project to date has been a really strong underpin of the double-digit EBITDA margins achieved in GPN in 21, and we believe has structurally lifted the profitability of the business relative to its 2019 base. We made significant progress on our portfolio during the year, in line with the strategy of simplifying the group behind our growth platform. The most significant portfolio realignment has been the agreement to dispose of our remaining 40% interest in Glanbia Ireland to the Co-op in Q4. Our strategic growth journey will remain that blend of organic M&A and portfolio review, and the acquisition by GPN of the Level Up brand in Q2 and by nutritional solutions of Pacmore and Q3 are very aligned to our overall growth strategy. Finally, further leveraging the capabilities we have in building and operating very large-scale dairy facilities in the US, we very successfully completed the commissioning of the cheese and whey facility in Michigan in the first half of the year. COVID, of course, continued to make life challenging for us all in 21. And once again, I can only thank and really acknowledge the way that all of my Glanbia colleagues, our supply chain partners, and of course our customers, worked tirelessly together to navigate the challenges of the pandemic. Our number one priority since the outset of the pandemic has been the health and safety of our employees. And through strict protocols, we operated all of our plans to plan last year. We maintained the integrity of our supply chain throughout 21 and into 22, to maintain delivery of our nutritious brands and ingredients to our customers and consumers. So turning then to our outlook for 22. Through the second half of 21, the underlying consumption trends that we'd seen in the first half very much continued. In GPN, we had continued strong momentum in our performance and general lifestyle brands, while the diet category remained sluggish, as consumers just didn't prioritize dieting, in a COVID challenge environment. In GN Nutritional Solutions, we had continued strong top-line momentum, which was fueled by continued customer and consumer trends in areas such as healthy snacking, immunity, where we have a huge range of innovative ingredient solutions. Of course, as we've spoken of previously, inflation became the emerging theme of the second half of the year. And as we've outlined, we have been progressively mitigating that trend, most particularly around pricing action since the latter part of 21. Our clear strategic focus for 22 and beyond is to drive growth across both GPN and nutritional solutions as the nutrition partner of choice for our customers and consumers. During 22, we anticipate the effects of COVID-19 will abate further, However, the ongoing impact of cost inflation, particularly dairy-related, will continue to be very actively managed, as indeed we did through 21. Given this context, we have started 22 very well, with very good growth momentum across both GPN and GN nutritional solutions, and we're very focused on maintaining the top-line momentum through the year. We believe that the actions we have taken in simplifying our portfolio, transforming the business, and investing for long-term sustainable growth will position us really well when we move through the current inflationary cycle. Based on today's market environment and our current expectations for the rest of the year, we expect to deliver both group revenue and EBITDA growth for 2022. We expect high single-digit revenue growth in both GPN and nutritional solutions, largely driven by our pricing actions. We express growth in earnings, with EBITDA growth to be driven by the continued growth of nutritional solutions. For GPN, we expect the full-year EBITDA to be broadly in line with 21, as anticipated revenue growth is offset by a margin decline of about 100 basis points versus the prior year. The impact of inflation in GPN is material, with year-to-year cost of goods inflation of approximately 20%, with inflation of dairy input costs around 70% of that total figure. Importantly, GPN has secured supply and fixed pricing for almost 90% of its expected dairy inputs requirements for the current year, and that gives us really good visibility, as well as protection against any further dairy price increases. Over the full year 22, Inflation is currently estimated to result in an EBITDA margin headwinds net of pricing action of about 300 basis points, against which we're driving further efficiencies and cost-saving initiatives that will contain the EBITDA margin decline versus 21 to around 100 basis points. We expect nutritional solutions EBITDA to grow in 2022. Material inflation headwinds there are also a factor. However, the combined impact of pricing actions plus further cost savings and indeed further efficiencies are expected to drive a nutritional solutions margin broadly in line with 21. For full year 22, performance in our GNUS cheese business will be broadly in line with 21. and the continuing joint ventures are expected to reduce somewhat versus the prior year, as we have some ongoing startup costs in our European joint venture and some inflation headwinds. So therefore, at a group level for full year 22, we expect adjusted earnings per share growth for continuing operations of between 2% and 8%. All of the earlier numbers I've said are on a constant currency basis, and all those numbers will rise on a reported basis with the adjusted earnings per share expected to rise by 5% if currency rates stay where they are today. Turning then to this segmental performance for 21. GPN recovered strongly in 21 from the COVID challenges of 20, a performance facilitated by the benefits achieved through the transformation program. Constant currency volume growth was 11.4% and price was up 4.5%. With the exit of the North American private label manufacture business, 98% of our revenues are now branded, and we grew those branded like-for-like revenues by over 18%, 18.3% in fact. Volume growth was strong across all channels and markets. Consumption trends across sports and general lifestyle nutrition have been very good throughout the year, and as mentioned earlier, this has continued into 22. GPN acquired the Level Up Gaming Nutrition brand in the second quarter, and this has been integrated successfully into our direct-to-consumer platform in Europe. Pricing was driven by increases in both the third quarter of 2020 and the third quarter of 2021. And to date, we've not seen material demand elasticity in response to those actions. We will, of course, continue to monitor that as we move through 2022. Margins for 21 were up 320 basis points as a result of our pricing actions taken. Efficiency from the GPN transformation programme and operating leverage was also part of our margin story as indeed was that strong volume growth. Overall, this led to a 65.5% increase in GPN EBIT A to 145 million. As noted earlier, GPN has started well in 22 to date. For the full year, we're focused on maintaining that top-line momentum. We expect high single-digit revenue growth at EBITDA broadly in line with 21 levels. Turning then to our leading brands, Optimum Nutrition continues to consolidate its position as the number one brand in the sports nutrition category and is now over half of GPN branded revenue. The team have delivered growth in ON through strong brand activation programs across pack design, creative, portfolio focus, and of course, investment discipline. Global revenue for ON was really strong, growing by almost 35%, with growth across all regions. Brand consumption in the key North American market in measured channels was also strong, up almost 19% in 21, driven by brand expansion and good velocities across key channels. ON is our pace and category growth, and we saw market share gains in our top five tracked markets, including the US, UK, China, Australia, India. During the year, we continued the global rollout of our proven marketing campaign with the More Than Your Body, Creative, now in 25 markets. We have over 1,000 individual partnerships globally with elite athletes and teams, coaches, trainers, ambassadors, and influencers. including Olympians, Indian Premier League, NFL, AFL, and, of course, rugby. This activity is key towards building education and influence with our target consumers. ON is a really strong platform for innovation, and with a strong focus on products like Gold Standard Whey and Amino Energy, in 2021, we expanded our reach with Amino Energy sparkling, ready to drink, for example, in the UK, US, and Australia. Overall, our energy platform is about 10% of our GPN revenues now, and is becoming a really exciting platform for us. On our GPN lifestyle nutrition brand portfolio, again, it's 31% of our overall brand of revenues, and that grew by almost 4% in 21. This encompasses SlimFast, Think, and Amazing Grass. SlimFast, as you know, is our lifestyle brand in the diet category, and we did see continued headwinds in that category, which led to consumption being down over 4% in North American key channels, over 21. Globally, our revenue declined by 0.6%, as North America declined was offset by growth in the UK. SlimFast continues to be a very strong brand and the most recognized weight management brand in the US, with 98% brand recognition in the category. To drive continued brand relevance, we have engaged with our consumers, and I think as I mentioned previously, we plan to reshape our SlimFast portfolio to meet the evolving needs of our consumers across both the weight loss but also weight management journey. In 21, we launched a new SlimFast advertising with Make an Entrance, or might surprise you, marketing campaigns in the US and the UK. We continue to innovate across formats, including keto, and we had a very successful keto rollout in the UK in Q4 of 21. You'll know that the other brands in our lifestyle portfolio are Think and Amazing Graphs, both growing very strongly through 21. We saw consumption growth across both those brands up almost 10%, with revenue up 14%. Again, as you probably know, Amazing Grass is a plant-based supplement and is the number one brand in the greens category in the US, with overall plants now about 5% of GPN revenue. The Think Protein Bar had a great year, and its growth outpaced the category. We had a good performance from the core Think range, as well as a really successful rollout of keto-related innovations under the Think brand. Across all of our lifestyle brands, we had integrated marketing campaigns as you would expect, across digital and traditional media, as we continued to build awareness and conversion. Turning then to Glanby Nutritionals. Glanby Nutritionals had a very strong year, with volume growth of over 18%. Price for the segment declined almost 8%, but this was all related to US cheese market price volatility, with a lower year-on-year average pricing. EBITDA was up almost 10% to 125 million, and this was driven entirely by the nutritional solutions business. As you know, nutritional solutions completed the acquisition of Pacmore in the third quarter, which increases our capability in the healthy snacking arena. Nutritional solutions, our ingredient solutions business, again had a really strong year. Volume was up 13.6%, with strong customer demand across essential nutrition, immunity solutions, and healthy snacking solutions. Pricing was up 3.7% as we passed through increasing dairy market pricing during the year. Margin was slightly back by 50 basis points, largely as a result of some higher input costs, but EBITDA grew 15.7% to 101 million. For GNNS, for the full year 22, we expect to deliver high single-digit revenue growth and good EBITDA growth. While NS is also experiencing material inflation headwinds, we expect the combined impact of pricing action plus further cost savings and efficiencies will drive an NS margin for 22, broadly in line with 21. The NS business is delivering growth ahead of its end market. It's leveraging its core capability across a really broad range of sectors, all of which are in growth. From an ingredient perspective, NS has strong capability across both dairy and non-dairy, with non-dairy now representing 59% of the business and is primarily focused on micronutrients, immunity solutions, and flavors. This part of the business grew almost 14% in volume in 21. The dairy business, which has primarily focused on healthy snacking, and specialized key dairy ingredients also had strong volume growth of around 13%, part of which was, of course, driven by the commissioning and commercialization of the whey from the Midwest Cheese Facility. In total, Nutritional Solutions delivered 17.3% like-for-like revenue growth. Nutritional Solutions occupies key positions in ingredient solutions and is a key player globally. where we service sports and lifestyle nutrition, supplements and immunity, and of course, mainstream food and bev, and specialized nutrition also, with ingredients that can add key nutritional benefits to products within those categories. On U.S. cheese, it had a resilient performance in what was a volatile environment. Volume was up almost 20%, which was driven by the commissioning of the large facility I've mentioned earlier in Michigan. US cheese markets were volatile in 21, and the business operates a pass-through model, as you know, but pricing declined a top line by 12% reflecting those lower markets. EBITDA was back slightly, slightly over 3 million, due to higher operating costs. With that, I'll hand over to Mark, who will speak to the financials.