Glanbia Plc Ord

Good morning and welcome to the Glambia PLC 2022 full-year results call with Siobhan Talbot, Group Managing Director, and Mark Garvey, Group Finance Director. Today's conference is being recorded. At this time, I would like to turn the conference over to Liam Hennigan, Group Secretary and Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to the Glambia full-year 2022 analyst results presentation. During today's presentation and 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 their time of their approval of the Columbia PLC full year 2022 preliminary financial statements and analyst 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 made on today's call, whether as a result of new information, future events, or otherwise. I'm now handing over to Siobhan Talbot, Group Managing Director, Glanbia PLC.

Good morning, everyone, and welcome to the Glanbia full-year 22 results call and presentation. On today's call, I'll outline a summary of our 22 performance and guidance for 23. I'm joined by my colleague, Mark Garvey, who will cover the 22 financial and operation results. I then return to outline some of the strategic highlights, after which we'd be very happy to turn the call over to yourselves for questions. 22 has been an important year from both a performance and strategic perspective for the group. Strategically, we completed a very thorough planning process, we evaluated strategic options, and we reaffirmed the strategic growth opportunity of our current business model. We're now very focused on driving growth in our better nutrition growth platforms of Glanby Nutritionals, Nutritional Solutions, and GPM. We set out clear targets to start from to 2025. In terms of performance, 2022 was all about navigating inflation by staying close to our consumers and customers, and of course, optimizing margins. The scale of inflation across both GPM and Nutritional Solutions was very significant. and our mitigation strategy was grounded in both a phased approach to pricing, where overall prices were raised by 19.7%, and also a strong drive to maximise operating efficiencies. We sustained key levels of investment for future growth and ultimately delivered margins in both growth platforms broadly in line with 21 levels. The platform synergies across the group worked well for us in 2022, driving performance, and ultimately the teams delivered strong revenue growth, an adjusted EPS that reflects our highest earnings level, and a strengthening of our balance sheet, which gives us great opportunity to fund future growth. In recent years, we've deployed capital to our growth opportunities, expanded our innovation capabilities, and continue to invest in hiring and developing our great talent, which is so key to our future growth. Our overall ESG agenda, which I'll touch on later, is increasingly embedded into our everyday ways of working. So the investment case for Glanbia is now very clear. Our business is very closely aligned to powerful consumer trends. We've evolved and simplified our organization, our strategy, and our structure. As our market environment has altered, so have we. There is an incredibly strong, clear thread of nutrition in Glanbia that was grounded in dairy protein, but now evolved to so much more. And that more now means that we have attractive global positions in growing nutrition categories. In Glendia, we match those consumer trends with our capabilities. We've defined the markets where we can best deploy our strengths. They're large, they're growing, and we're very clear on our areas of focus within them. We have a strong culture and talent. We've scaled, experienced, efficient operators and our manufacturing footprints. We build and operate assets with best-in-class efficiency. providing security of supply and quality assurance to our customers and consumers. And of course, and Mark will speak to later, we're financially disciplined, which gives us great options for future growth. These are all barriers to entry in our categories, difficult to replicate, and come from years of investment and optimization. So our strategic pillars are very clear, leading and growing our core, optimizing our business, and being disciplined financial managers. We do that through the strength of our leading global nutritional solutions business and our leading GPM global brands. Our core today is the provision of consumer-focused, differentiated, functional and nutritional products across a range of science-based ingredient solutions and those leading brands. We're always navigating change as part of our DNA, really. Our markets and consumers have evolved, and we've evolved our portfolio in recent years, such that 90% of our earnings now come from NS and GPM. Our business and operating model will continue to be refined to improve productivity and margins. And then finally, to cash. A core ethos of Glanbae is our financial discipline. We're focused on cash, cash conversion, capital allocation, and of course, shareholder returns. As Mark will speak to later, in the five years to 22, we generated over 1.6 billion in cash, declared 400 million in dividends, returned 270 million buybacks, and also have invested in the business and acquisitions. So the essence of the evolution of Glanbia has been to move away from commodity processing to the higher margin, growing, added value areas of nutrition. As I mentioned earlier, that complementary thread of protein expertise runs across both businesses. Informed by increasing investment in consumer engagement, insights and our R&D, both businesses have extended significantly beyond protein, both organically and by acquisition, and now serve a variety of those consumer nutrition needs across multiple occasions, formats and, of course, geographies. On this strategic journey, we've significantly evolved our operating model to best serve our customers and consumers. We have aligned centres of excellence in areas such as financial operations, capital allocation and risk management, with the business unit teams now really driving that one face to the customer supported by those centres of excellence. I'll speak a little bit more later to the specific strategic focus areas for GPN Nutrition Solutions. Our portfolio changes and focused strategic approach has served us well in navigating what has been volatile external environment in recent years. And this is ultimately reflected in our strong 22 performance. As a strategic pillar, we're always focused on simplifying our group structure and optimizing our overall margins. In 22, we completed the disposal of our 40% interest in Danby, Ireland for 307 million, In our mozzarella joint ventures in Ireland and the UK, Glanby and Leprino Foods have enjoyed many years of successful partnership, but the time is now right for us to dispose of our 50% stake in the business to Leprino Foods. This further streamlines our business model and is expected to provide capital of approximately 160 million plus a potential 25 million earners to be ultimately allocated to our global growth platforms. We're ambitious to deploy capital across both these areas adding to the capability, for example, we added with the acquisition of Sterling Technologies in NS in 22. Across these growth platforms, continued margin augmentation is also a key priority. In GPN, the multi-year transformation program was completed in 22 and it has outperformed its business case. This underpins business margins as we go forward and has enhanced key skills that were an important part of the inflation mitigation program for 22. These actions plus the price realizations that we achieved led to an improving trend in GPN margins through 22, and we achieved the target of 12% EBITDA margin in the second half. In GN, across the business, operational excellence is a hallmark of all of the teams. This continued focus and improving business mix all contributed to a 22 margin delivery in NS and GPN that was broadly in line with 21, despite the significant dilutive effects of the high dairy markets we've referenced before. Looking back, in May 18, we set out financial targets for the five-year period 18 to 22. It's very fair to note that when setting those targets, the scale and the tenure of the global disruption that would emerge from the global pandemic was completely unforeseen. The agility and resilience of the Glanbia teams, The evolution and strength of the group and our customer and consumer relevance of the better nutrition elements of our business really came to the fore over this period. We're therefore pleased to report that at a group level, we met all of our financial targets set out at that time across earnings, cash and cash conversion, return on capital and dividend return to shareholders. We deliver this while also really having a very strategic focus and further strategic execution across the group. In November just gone, we set out our financial targets for the period 23 to 25. Having delivered a stronger 22 than anticipated, we're pleased to reaffirm those targets from this higher base. In 23, therefore, we plan to grow adjusted EPS between 5 and 10% on a constant currency basis. We continue to optimize investments driving an operating cash flow of over 80% and are targeting a rocky of between 10 and 13%. With that now, I'll hand over to Mark for some further detail on 22.