Glanbia Plc Ord

Good morning and welcome to the Glambia 2024 full year results call. During today's call, the directors may make 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 the Glambia full year 2024 results announcement. Due to inherent uncertainties, including both economic and business risk factors underlying such statements, actual results may differ materially from those expressed or implied by those 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 the call over to Hugh Maguire, CEO, Glambia PLC.

Thank you, Liam. Good morning, everyone, and welcome to the Glambia full-year 2024 results call and presentation. I'm joined on today's call by Mark Garvey. I will give a business review of 2024, and Mark will then cover the financials and outlook. At the end of the call, we will be very happy to turn the call over to you for questions. I'm pleased to report that the group delivered a strong performance in 2024, with adjusted earnings per share growing by 6.8% to $0.140. This was driven by strong consumer demand for our better nutrition brands and ingredients, with good volume growth across our portfolio. The group delivered revenues of $3.8 billion, representing an increase of 5.8% on a pro forma constant currency basis. In Glambia Performance Nutrition, we continue to see good consumer demand for our performance and healthy lifestyle brands, and we're particularly pleased with the continued growth momentum in our Optimum Nutrition and Ice Pure brands, which both delivered double-digit volume growth in the period. In Glambia Nutrition Solutions, we saw good customer demand across our end-use markets, delivering volume growth across our pre-mix and proteins businesses. The group delivered pre-exceptionally with a DA of 551.3 million, represented an increase of 11.8% and EBITDA margins of 14.4%, an increase of 80 basis points with margin expansion across both GPN and Nutrition Solutions. We continued our strong track record of delivering returns to shareholders by raising the dividend by 10% and returning 102 million in 2024 via our share buyback program. We currently have a 50 million program ongoing And we're also very pleased to announce today that the board has approved a further 100 million share buyback for 2025. As well as delivering a strong operation on financial performance, 2024 was a year of strategic evolution for the group. We progressed our M&A agenda with the acquisition of Flavour Producers, which was completed in April 2024. And in November, we announced a group-wide transformation program to drive efficiencies across the group's new operating model and support the next phase of growth. In 2025, the group will operate three segments, performance nutrition, health and nutrition, and dairy nutrition. The new structure is designed to further simplify our business, increase focus on high-growth, end-use markets, and provide greater insight into Glambia's value drivers and growth opportunities. We have made significant progress on our transformation program, which will deliver across four work streams as we optimize our operating model, unlock supply chain efficiencies, accelerate our digital transformation, and optimize our portfolio to ensure we are focused on the highest growth opportunities. As part of this evolution, we have made the decision to exit the SlimFast brand and our body and fit direct to consumer e-commerce business, and I will speak more on this and the broader transformation program shortly. As outlined at our quarter three trading update in November, we've seen a significant increase in high-end weight costs, reaching unprecedented levels. As a group, we have to navigate this in the second half of 2024 with increased weight costs impacting the GPM business and benefiting the nutritional solutions business. We believe these headwinds are transitory and are determined to navigate these with resilience and agility. We have identified a number of initiatives to somewhat offset this inflation in 2025, and I will speak more about this shortly. But first, turning to performance, GPM delivered revenue growth of 0.5%, EBITDA growth of 8.3%, and an EBITDA margin of 16.9%, which represents an increase of 120 basis points versus 2023. The revenue growth was driven by a 2.9% increase in volume, a 4.2% decrease in price, and a 1.8% impact from the 53rd week in 2024. Excluding Slimfast and Body & Fit, GPN delivered constant currency revenue growth of 5.2%. From a regional perspective, America's revenue is marginally down versus last year due to the weight management headwind and increased competition in the second half of the year. Our international business delivered growth of 2.3%, driven by strong volume growth in the optometrician brand across key markets, particularly across Asia Pacific, offsetting some competitive dynamics in the online channel in Europe. The growth in our international business continues to be supported by increased investment and the scaling of our in-market capabilities. We're pleased with the continued growth momentum in Optimum Nutrition and iSuffure, both delivering double-digit volume growth, which was offset by challenges in our other portfolio brands. Pricing declined by 4.2%, driven by our promotion activity, which continued into the fourth quarter, and some specific tactical pricing initiatives which saw a good volume uplift. We continue to invest in our brands, prioritizing the protein growth brands, maintaining a double-digit marketing investment. We're pleased with the EBITDA progression, with GPN delivering EBITDA of $305 million, an increase of 8.3% constant currency over a prior year. EBITDA margin was 16.9%, representing an increase of 120 basis points. This expansion was driven primarily by lower way input costs in the first half of the year, and a continued focus on operating efficiencies and margin optimisation. Optimal nutrition continued its global momentum, delivering revenue growth of 7.5%, including volume growth of 10.4%. This volume growth is marginally ahead of our expectations and was supported by continued promotion activity and marketing activation in the fourth quarter. U.S. consumption grew by 0.4% as we continued to see good growth in the FDM channel, offset by continuing softness in the specialty channel and increased competitive dynamics in the club channel. We continue to increase our retail distribution, and I'm pleased to say that we've seen good growth across our key distribution metrics in our USFTM measure channels, growing our TDP and ACD. The brand's household penetration also grew, supported by the increased marketing activation and visibility. Our focus continues to be on driving recruitment and conversion, broadening the brand's appeal through increased campaign reach and education. The Optimum Nutrition brand enjoyed increased visibility via its partnership with the McLaren Formula One team and its strong digital engagement via online educational tools such as the Optimum Coach and the Protein Calculator that both provide personal advice for consumers. In terms of innovation, we've launched a number of line extensions in the year across our protein and energy offerings, including new flavors of Guaico standards, creating amino energy and multiple smaller pack sizes, including stick packs. addressing affordability. We are particularly pleased with the performance of creating, which is delivering good growth globally, driven by distribution gains and key channels as energy sets continue to expand. And we're also working on Wago Standard 2.0, targeting additional attributes as extensions to the brand. Looking into quarter one, while we expect competitive dynamics to persist, particularly in the club channel, we have strong new marketing campaigns, such as Pretty Damn Good in the US, featuring women's basketball star Cameron Brink, and mid-busting in international markets, featuring a range of elite athletes. March sees the start of the 25 Formula One season, and Optimal Fishing will be continuing its partnership with McLaren with activation at the Australian and Chinese Grand Prix. Turning to our healthy lifestyle portfolio, Isofure Pink and Amazing Grass Brands delivered revenue growth of 2.3%, and US consumption growth of 3.3%, building on a strong comparison. Isofure, Our high-protein, low-carb brand, grounded in purity, continues to do well delivering double-digit volume growth in the year. The brand continues to resonate with nutrition-conscious consumers who value purity, high quality, and clean ingredients to support their healthy and well-balanced lifestyle. And our Add Less, Do More campaign has continued to roll out in digital channels and through social influencers. We continue to drive distribution, and while off a low base, We're pleased by the good growth we've seen in ACV and TDP, and it's also positive to see household penetration grow strongly. From quarter one, 2025, a new look master brand and formula for IsoPure will be launched, increasing brand visibility, improving flavor appeal, and connecting across the different product groups. I think approaching bar business continues to compete in a bar category with a large addressable market, but a highly competitive environment. Innovation in this category is important, and we continue to extend Think Innovation with Crispy Squares and leverage the brand's partnership with Girl Scouts USA. We are currently rolling out our new marketing campaign, Don't Think Think, which went live at the beginning of 2025. Amazing Grass, the smallest part of our Healthy Lifestyle Brands portfolio, delivered software volumes in the period against heavy promotional spending from new entrants to the category. We just relaunched Great Taste in New Formula of our green superfood, And in the coming weeks, we'll be launching a new innovation with our new Sweet Greens line, with efficacy and sweeter taste to appeal to mainstream consumers. Moving to our second growth platform of nutritional solutions, revenue grew by 14% in the year on a constant currency and pro forma basis. This was driven by a 3.6% increase in volume, a 0.4% increase in price, a 7.7% increase from the impact of acquisitions, and a 2.3% increase from the 53rd week. The price increase was driven by strong dairy market pricing, somewhat offset by negative premix pricing. Volume growth was fueled by a good performance in our premix and protein solutions businesses. Demand remains strong in our priority end-use markets, with sustained demand from customers for vitamin and mineral fortification and high-protein healthy snacking. The functional beverage category continues to experience strong growth internationally, particularly in the EMEA region, and we're continuing to see good demand for our high-protein crisp products in bar and cereal applications. We're continually investing in innovation and expanding our capacity to provide the best solutions for the evolving needs of both consumers and customers. Flavor Producers, our recently acquired flavors business, continues to perform well with the integration on track. Nutrition Solutions' EBITDA was $200 million, up 27.2% constant currency. EVDA margins are strong at 19.8%, an increase of 200 basis points versus full year 2023 pro forma. Margin expansion was driven by strong dairy pricing with the protein solutions business. Turning to 2025, we've made a change to our operating model as we separate Lambion Nutritionals into two new segments to allow greater focus on our higher margin growth priorities, further simplifying our business and better serving our growing customers and end-use markets. The healthy nutrition business comprises the pre-mixed solutions and flavor platforms and focus on priority high-growth end-use markets such as vitamin minerals and supplements, active lifestyle nutrition, and functional beverages. The average growth rate in these markets is approximately mid-single digits. We partner with both established and emerging brands in product development, offering a unique proposition by combining flavors with key function ingredients and application science. This is a business we've grown organically and via acquisitions in recent years to become a scale operator. And we will continue to target acquisitions to further grow this segment. The dairy nutrition business combines our US cheese and nutrition solution protein portfolios. The business will operate as a standalone business with dedicated leadership team from 1st of July with the goal of optimizing profits and returns as a leading dairy business. This platform is largely one integrated manufacturing footprint with a high supply and operational interdependency, and is also the route to market for a joint venture supply of whey and cheese ingredients. This business provides a scale leadership position in dairy as the number one producer of whey protein isolate and the number one producer of American-style cheddar cheese. This new structure will also provide enhanced visibility on the impact of whey across our ingredients and consumer businesses and give better visibility to the different margin and growth profiles of both businesses. I would now like to give an update on high-end weight, which, as a reminder, is a key input cost for GPN and a significant component of the revenue and profit in dairy and nutrition. As we have previously outlined, high-end weight prices trended upwards in the second half of 2024, and this has continued into 2025. This will be a net negative to group earnings, as the impact in GPN will only be somewhat offside by upside in dairy and nutrition. For GPN, at the time of our quarter three results in November, we procured until approximately April at elevated prices. As we've been recently engaged in wage suppliers for further wage procurement, it has become clear that the market prices for high-end wage have continued to increase to unprecedented levels beyond what we had previously planned for. For perspective, high-end wage prices are currently over 20% higher than the peak prices we saw in 2022 when wage prices were last elevated. Given the new supply of high-end whey coming online in late 2025 and through 2026, which will be approximately 15% to 20% of global supply, we expect whey prices will normalize going into 2026 as supply and demand dynamics rebalance. So while we believe these elevated whey prices will be transitory, we currently expect them to result in a double-digit increase in GPN's costs of goods sold, representing a headwind of almost $200 million in 2025. Through a range of initiatives, we expect to be able to mitigate approximately three quarters of the impact on our P&L in 2025. However, the scale of the increase is such that it cannot be fully mitigated and results in margin dilution in GPN in 2025. These levers include RGM initiatives, primarily price increases, the right price pack architecture, and trade and promotion effectiveness. Product reformulation, where we will look to reduce and reformulate with other proteins. And marketing spend effectiveness, where we believe we can reduce marketing to levels we traditionally spent at. As part of our longer term strategy, we're exploring initiatives to mitigate high end wave volatility, as it's critical that we reduce the extremes impacting our margins. We plan to ensure we have new supply coming on regularly and we're investigating alternative protein sources as part of our innovation strategy. And lastly, investing in additional capacity in our own joint ventures. As we know from previous weight cycles and our dairy insights, high-end weight prices soften as new supply becomes available, and this will be a positive impact on our margins in 2026. As I referenced earlier, we're making good progress on our group-wide transformation program to drive efficiencies across our new operating model and support the next phase of growth through three focus divisions. Overall, the transformation program is a three-year initiative, and as well as supporting future growth, the program is expected to generate annual cost savings of at least 50 million by 2027, which will be utilized across reinvestment of the business and profitability improvement. The program will deliver across four areas. The first is the operating model optimization, where I've already outlined as we've separated our Glambia Nutrition's business into two new segments. The second pillar is to unlock supply chain efficiencies, as we've identified efficiency opportunities to be delivered by building a global supply chain organization, particularly across manufacturing, procurement, and quality. The third pillar is about accelerating our digital transformation, which has been underway since the middle of last year. It's all about finding a better way a better way to run our processes across our back office, make better use of master data technology and AI across our enterprise, and build out our commercial excellence across our front office. This program will also centralize and outsource the delivery of certain support functions and support improved business processes. The final pillar is our ongoing portfolio evaluation. We're focused on simplifying our group structure and optimizing our overall margin. As part of our ongoing portfolio review, and in order to ensure focus on high growth opportunities, we've decided to exit our weight management brand, SlimFast, and our body and fit direct-to-consumer e-commerce business in the Benelux region. As we've discussed previously, following strong growth post-acquisition, the performance of the SlimFast brand has been challenged in recent years, driven by a fundamental change in the diet category of the U.S. and consumer attitudes to weight management post-COVID. While we will continue to stabilize the brand performance, we bright-sized our investment in the brand and have made the decision to exit. For body and fit, given the continued prioritization of optimum nutrition, which has seen very good growth in the Benelux region, and the pressures on the economics of the direct-to-consumer channel, we have evaluated the role of the business and have made the decision to exit. We will continue to evaluate our broader portfolio with a focus on delivering long-term sustainable and profitable growth. And with that, I will hand over to Mark to take you through the financials.

Thank you and good morning to everyone on the call. I will take you through the key financial highlights for 2024 and our outlook for 2025. 2024 group revenue was $3.8 billion, which was an increase of 5.8% pro forma on the prior year. Volumes were 2.3% higher, primarily due to a strong performance by our ON and Isopure brands, in GPN, as well as good growth in premix and proteins in nutritional solutions. Pricing was 0.5% lower due to promotional activity, as well as tactical pricing reductions in GPN, mostly offset by higher dairy market pricing in Glambia nutritionals. The 53rd week contributed 2% to revenue growth, and the acquisition of flavor producers during the year also contributed 2%. Group EBITDA pre-exceptionals was $551.3 million, an increase of 11.8% cost in currency due to strong EBITDA growth across both GPM and GM. We saw good progression in group EBITDA margins from 13.6% to 14.4%, with margin increases across both GPM and Nutrition Solutions, where margins increased 120 basis points and 200 basis points, respectively. Adjusted earnings per share was 140.03 cents, an increase of 6.8% in constant currency and in line with our guidance of 5% to 8% growth. Adjusted EPS growth in 23 and 24 is ahead of our capital markets day average target range of 5% to 10%. We have strong operating cash flow of $485 billion with an operating cash flow conversion of 88% ahead of our 80% target. Return on capital employed for the year was 12.4%, an increase of 20 basis points from 2023, and at the higher end of our capital market state target range of 10 to 13%. Cash flow generation was strong in 2024, while operating cash flow of $485 million compared to $446 million in 2023. Operating cash flow conversion was 88% compared to 90.4% in prior year. Operating cash flow was enhanced by a strong increase in EBITDA, as well as disciplined working capital management. Free cash flow improved from $390 million to just under $403 million due to the improved operating cash flow performance. At year end, left debt was $436 million, up from $249 million prior year, with the increase predominantly as a result of the acquisition of flavor producers completed in April. The closing net debt balance represents a net debt EBITDA ratio 0.8 times, interest cover in 2024 was 16.7 times. The group is operating well within its financial competence. The group has $1.3 billion in committed debt facilities with a weighted average maturity of 3.8 years with no facility due for renewal prior to late 2027. Now turning to our capital allocation framework, The group spent just over $58 million on strategic capital expenditure in 2024, including ongoing capacity enhancements, business integrations, IT investments to drive further efficiencies in operations. In 2024, we acquired Flavor Producers, a leading flavor platform in the US for $300 million. This acquisition significantly expands our flavors offering in the attractive and growing natural and organic flavors market and is performing well. They were producers for us part of our new health and nutrition division. The group continued to return capital to shareholders with $104 million returned via dividends. And today we announced we are increasing the 2024 final dividend by 10%. So the total dividend for 2024 will be 38.97 euro cents, representing a payout ratio of 30.1%. And in the middle of our guided payout ratio range of 25 to 35%. the Group is committed to a progressive dividend policy. In addition, the Group returned €102 million to shareholders via share buyback programmes in 2024, acquiring and cancelling 6.2 million shares at an average price of €16.51. We currently have an ongoing €50 million buyback programme which commenced in December 2024, and today we announced that the Board have authorised a further €100 million buyback programme for 2025, which we expect to commence during the second quarter. Exceptional items amounted to a net after-tax charge of $145.6 million compared to a gain of $46.4 million in the prior year. As Hugh discussed, we have commenced a group-wide transformation program, which we expect will generate annual savings of at least $50 million by 2027. During the year, $18 million was incurred related to this program. which primarily related to further streamlining and preparing for outsourcing of certain back office functions. In total, we expect the implementation of the transformation program will incur between $70 and $80 million of costs through 2027, and we will provide further details of the phasing of these costs at our Capital Markets Day later this year. Acquisition and integration costs related to the flavor producers acquisition amounted to $5.7 million. We've decided to exit our Benelux direct-to-consumer e-commerce business body and fit, and have classified the business as held for sale at year-end, resulting in a fair value adjustment of $46 million. Also, a non-cash impairment charge of $91.4 million has been taken in respect of SlimFast, and as part of the group's continuing portfolio review subsequent to year-end, we have decided to exit the SlimFast business. Some other financial matters to note are as follows. The share of profits from joint ventures was $12.4 million lower than prior year, largely driven by higher input costs not fully recovered in milk price and unfavorable market pricing dynamics, which did not recover as expected in the second half. Looking to 2025, the joint venture will benefit from federal order reform. At this point, we would expect 2025 performance to be more in line with 2023. Net finance costs were $26.8 billion, $14.5 billion higher than prior year due to higher average net debt levels as a result of the acquisition of flavor producers and higher average interest rates. The effective tax rate for 2024 was 16%, and we expect the group's effective tax rate to be in the 14 to 16% range in 2025. And in 2025, the group expects capital expenditure, including business-sustaining capital expenditure, to be in a range of $80 to $90 million. As announced at our Q3 results, and as Hugh has spoken to earlier, we have commenced a group-wide transformation program and have created a new operating model as part of this. Glamby Nutritionals has been split into two segments, Health and Nutrition and Dairy Nutrition in 2025. We have provided 2023 and 2024 pro forma financial information for these new segments. Health and Nutrition had 2024 pro forma revenues of $558 million. This increased 12% from 2023 due to growth in our pre-mix business and the acquisition of flavor producers in April 24. Health and Nutrition EBITDA was $98.7 million, up 9.2% on prior year, and EBITDA margins were 17.7%, a 40 basis points decline due to some lower costs which were passed through. Health and Nutrition operates in attractive categories, growing in the mid-single-digit range, with high teens' EPA-DA margins, and we are confident in the long-term growth of this division. Dairy Nutrition delivered 2024 pro forma revenues of $1.5 billion, up 10.4% from 2023, due to strong performance in the protein solutions business and pass-through dairy market pricing. EPA-DA was $147.2 million, up 22%, benefiting from strong protein markets. EPTA margin in dairy nutrition was 10%, a 100 basis points increase from 2023 as a result of strong dairy market pricing. We are focused on standing up the dairy nutrition segment and a standalone business which will be optimized for future returns. Now I would like to turn to outlook for 2025. Performance nutrition, like for like revenues are expected to be broadly in line with prior year excluding the impact of SlimFast and Body and Fist. Total performance nutrition revenues are expected to be down in single digits, primarily due to the 53rd week comparison, and the drag from SlimFast and Body and Fist, as well as increased competitive dynamics in the club channel, which will impact the first half. As a result, we expect quarter one revenues will be down high single digits, with sequential revenue improvement expected in Q2 and the second half. EBITDA margins are expected to be in the range of 13% to 14% as a result of unprecedented increases in input costs. As Hugh has discussed, weight costs have continued to trend higher in 2025, and we expect these costs to remain elevated versus our original expectations for much of the year. We have not anticipated this dynamic when I spoke to you last year on our Q3 earnings call, and this has led to a revision in our margin expectations for performance nutrition in 2025. EBITDA margins are expected to be lower in the first half as we expect price increases will mitigate the impact of higher rate costs somewhat in the second half. In response to increased input costs, we are taking several actions to mitigate this, including utilizing all levers within our revenue growth management playbook, including mid to high single digit price increases. A reduction in marketing spend as a percentage of revenue from low double digit to a more normalized mid to high single digits and careful control of other operating and administrative expenses. We have contracted waste supply to cover our costs through most of Q3, and we have made a prudent assumption for weight costs in Q4. We have line of sight to an additional 15 to 20% capacity in waste supply coming on stream at the back end of 25 and through 26. Based on historical patterns, we believe this will lead to a reduction in these input costs in late 25 and into 26, and we will see this benefit our performance nutrition margins in 2026. We expect to deliver mid-single-digit like-for-like revenue growth in health and nutrition with EBITDA margins in the range of 17% to 18%. Revenue growth will be volume-led and will be delivered through a combination of our premix and flavor solutions businesses. We expect profit growth across our dairy, nutrition and joint ventures combined. We expect operating cash conversion to be over 80% and returning capital employed to be in line with our medium term targets of 10 to 13% outlined in our capital markets day. For 2025, we expect to deliver adjusted earnings per share in the range of 124 cents to 130 cents, second half weighted, which will be led by revenue and EBITDA growth in health and nutrition, continued optimization of EPA and dairy nutrition at our joint venture operations, offset by a decline in EPA and performance nutrition, primarily as a result of higher input costs, which we expect to be transitory. I would note that this guidance excludes the potential impacts of tariffs as the environment remains uncertain. We are carefully monitoring the various announcements on tariffs and are working on plans to mitigate some of these potential impacts. And with that, let me hand it back to Hugh.