TIDMGLB
RNS Number : 9484F
Glanbia PLC
01 November 2018
THIRD QUARTER 2018 INTERIM MANAGEMENT STATEMENT
Q3 YTD volume growth of 6.7% - Full year earnings guidance
reiterated
1 November 2018 - Glanbia plc, the global nutrition group
('Glanbia', the 'Group' or the "plc"), is issuing this Interim
Management Statement for the nine month period ended 29 September
2018.
Commenting today, Siobhán Talbot, Group Managing Director
said:
"The year is progressing as planned and good delivery in the
third quarter resulted in volume growth of 6.7% in the first nine
months of 2018 from our wholly-owned continuing operations. This
reflected good demand across Glanbia Performance Nutrition ("GPN")
and Glanbia Nutritionals ("GN"). Pricing declined by 4.1% largely
as a result of lower year-on-year dairy markets which is also
benefitting input costs and we expect full year margins in GPN and
GN will be in line with prior year. We continue to execute our
strategy and, in addition to growth in our core business, we
recently announced the acquisition of SlimFast which will further
enhance our portfolio. We reiterate our full year guidance of 5% to
8% growth in adjusted earnings per share, constant currency, for
the continuing Group in 2018."
Performance update (Continuing operations*)
In the nine months ended 29 September 2018, wholly owned revenue
from continuing operations increased 3.7%, constant currency. On a
reported basis, reflecting the weaker US Dollar Euro foreign
exchange rate, revenue decreased by 2.6% when compared to the same
period in 2017. Revenue increase, on a constant currency basis, was
driven by volume growth of 6.7% and acquisitions which delivered
1.1%. Pricing declined by 4.1% versus the same period in the prior
year driven by relatively weaker dairy markets and brand
investment.
Glanbia Performance Nutrition (all commentary is on a constant
currency basis**)
GPN delivered revenue growth of 4.7% in the first nine months of
2018. This was driven by volume growth of 6.7%, the Body & Fit
acquisition delivering 2.4%, offset by a pricing decline of
4.4%.
Volume growth was broadly based and underpinned by successful
innovation in key markets. Pricing decline reflected reinvestment
of input cost savings in brand investment, foreign exchange
headwinds, in certain non US markets, and innovation support. In
the US, the market remains competitive for ready-to-eat in
particular. GPN continues to manage channel shift to the food,
drug, mass and club channel ("FDMC") reflecting broader lifestyle
consumer demand. In the LAPAC region several markets across Asia
and LATAM delivered a good performance.
The full year 2018 outlook for GPN is good. Guidance is
reiterated for the delivery of like-for-like branded volume growth
in the mid-to-high single digit range. EBITA margins for the full
year are expected to be broadly in line with 2017.
Acquisition of SlimFast
After the period end, on 11 October 2018, Glanbia announced that
it had agreed with the owners of KSF Holdings LLP and HNS
Intermediate Corporation who collectively own SlimFast and other
brands ("SlimFast"), to acquire such entities for $350 million (the
"Transaction"). SlimFast will be part of the GPN segment and is a
leading weight management and health & wellness brand family
distributed primarily in the FDMC channel in the US and UK. It is a
well-established and growing brand with high levels of brand
awareness in the US, its largest market. SlimFast is a good
strategic fit for Glanbia as it participates in the growing $8
billion global weight management nutrition category which is
incremental to performance nutrition and fulfils a key consumer
motivation for GPN's lifestyle consumers. It has a strong position
in the ready-to-drink format and provides scale in the FDMC
channel. The transaction is expected to close before the end of
2018 and is expected to be earnings accretive from 2019.
Glanbia Nutritionals (all commentary is on a constant currency
basis**)
GN delivered revenue growth of 3.0% in the first nine months of
2018. This was driven by a volume increase of 6.8% offset by a
price decline of 3.8%.
Nutritional Solutions
Nutritional Solutions ('NS') revenue increased by 0.7% in the
period. This was driven by volume growth of 7.3% as a result of a
strong performance across all regions in the third quarter. Price
declined by 6.6% which was primarily related to relatively lower
year-on-year dairy prices. NS continues to focus on value-added
ingredient solutions to drive growth with its customers. In the
period specialist vitamin & mineral blends, dairy and
plant-based ingredients all performed well.
US Cheese
US Cheese revenue increased by 4.8% in the period. This was
driven by volume growth of 6.4% due to the timing of customer
off-takes versus the prior year. Pricing declined by 1.6% as a
result of reduced year-on-year cheese markets.
GN expects moderate EBITA growth in full year 2018 to be driven
by non-dairy ingredients and US Cheese which will be offset by a
reduced performance in dairy ingredients as a result of lower
year-on-year whey markets. Guidance for GN is reiterated with
volume growth in Nutritional Solutions expected to be in the
mid-to-high single digit range. GN's EBITA margin for full year
2018 is expected to be line with prior year.
Joint Ventures (all commentary is on a constant currency**
basis)
Glanbia's share of Joint Ventures ("JVs") revenue from
continuing operations*** increased by 5.0% in the first nine months
of 2018. This was driven by volume growth of 8.4% primarily as a
result of the capacity expansion at the Southwest Cheese JV, which
was completed in the first half of 2018, and milk supply growth in
the Glanbia Ireland JV. This was offset by a pricing decline of
3.4% due to comparatively lower year-on-year dairy markets.
The lag between dairy market price movements and milk input
costs is likely to reduce margins in JVs and as a result JVs are
expected to deliver a somewhat reduced share of profit after tax in
full year 2018 versus prior year.
Financing
Glanbia's net debt at 29 September 2018 was EUR398 million,
which represents a decrease of EUR84 million versus the net debt
position at the end of the third quarter of 2017. This improvement
has been primarily driven by good cash conversion. Glanbia expects
to close the SlimFast acquisition before the end of 2018 and will
use available banking facilities to finance the Transaction in
full. Glanbia expects to deliver over 80% operating cash conversion
of EBITDA in 2018. Total 2018 capital expenditure is expected to be
approximately EUR65 million to EUR75 million. On this basis Glanbia
expects its net debt to EBITDA ratio to be under 2 times at the
2018 financial year end.
Full year outlook
Glanbia reiterates its guidance that on a pro-forma* basis
adjusted earnings per share for the continuing Group is expected to
grow between 5% - 8% constant currency for full year 2018. If the
average Euro US Dollar foreign exchange rate for the full year
remains at similar levels to the average rate for the first nine
months of 2018 Glanbia expects an approximate 5% translational
headwind to full year reported results.
* Pro-forma adjusted Earnings Per Share of the continuing Group.
This eliminates the contribution of discontinued operations from
prior year comparatives. Discontinued operations relates to assets
which were sold during 2017.
** The Constant Currency movement elements the impact of foreign
exchange rates on translation of results to Euro for reporting. To
arrive at the Constant Currency change, the average FX rate for the
current period is applied to the relevant reported result from the
same period in the prior year. The average Euro US Dollar FX rate
year to date ('YTD') to Q3 2018 was EUR1 = $1.195 (YTD to Q3 2017
was EUR1 = $1.114).
*** Continuing operations within Joint Ventures assumes the full
year effect of an acquisition completed during 2017 by the Glanbia
Ireland joint venture on the 2017 comparable revenue number.
Ends
Cautionary statement
This announcement 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 report. 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 contained in this announcement, whether as a result of
new information, future events, or otherwise.
IMS conference call dial-in details
There will be an analysts' conference call to accompany this
Interim Management Statement at 8.30 a.m. (GMT) today.
To listen to the call, please dial-in using the following
numbers:
Ireland UK Europe USA Pass code
0330 336 +44 330 336
01 2465638 9105 9105 323 794 2423 5470330
--------- ------------ ------------- ----------
A replay of the call will be available for 30 days from this
afternoon. Please see the link below to the Investor Relations
section of the Glanbia plc website for details:
http://www.glanbia.com/investors/results-centre
For further information contact
Glanbia plc +353 56 777 2200
Investors
Liam Hennigan, Group Director, Strategic Planning & Investor Relations: +353 86 046 8375
Media
Martha Kavanagh, Head of Corporate Communications: +353 87 646
2006
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END
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