Shareholders to ‘Gain’ as Glanbia profits soar

Glanbia has released its annual report for 2017, showing an eighth consecutive year of double digit earning growth – with a target dividend pay-out ratio set to between 25% and 35% of annual adjusted Earnings Per Share (EPS) in the pipeline, according to group managing director Siobhan Talbot.

Following a successful year, the group’s reported profit after tax of €329.4 million – up €117.3 million on 2016 – was driven by underlying performance and the profit arising on the disposal of 60% of the Dairy Ireland segment.

Wholly-owned EBITA (Earnings Before Interest, Tax and Amortisation) from continuing operations was reported as €283.2 million – up 5.8% on the €273.3 million recorded in 2016 based on constant currency rates.

The board has recommended a final dividend of 16.09c/share. This would give a full year dividend of 22c/share for 2017 – an increase of 65% on 2016 – with a revised dividend policy in place targeting an ongoing dividend pay-out ratio of 25% to 35% of adjusted EPS.

Eighth year of double-digit growth

Talbot commented on the results and plans for 2018, stating: “I am delighted to announce Glanbia’s eighth year of double-digit earnings growth in 2017.

“On a pro-forma basis from continuing operations adjusted EPS was up 10.2%, constant currency, and wholly-owned revenue was up 9.2%, constant currency.”

Growth was driven by Glanbia Performance Nutrition, Glanbia Nutritionals and joint ventures – with good volume growth across all segments, the company reported.

2017 saw the continuation of the “strategic evolution of the group portfolio” following the acquisition of the Amazing Grass and Body & Fit businesses, along with the disposal of 60% of Dairy Ireland and the subsequent creation of the Glanbia Ireland joint venture.

Talbot continued: “These initiatives demonstrate the ambition of the group to build on its existing strengths, drive future sustainable growth and deliver on our vision to be one of the world’s top performing nutrition companies.

Our focus in 2018 will be on volume-driven revenue growth across our wholly-owned growth platforms of Performance Nutrition and Glanbia Nutritionals.

“The outlook for 2018 is positive and I expect Glanbia will deliver between 5% to 8% growth in pro-forma adjusted EPS on a constant currency basis.

“We expect growth to be delivered in the second half of 2018 as comparative dairy dynamics and planned investments will adversely affect performance in the first half of 2018.

Finally, recognising the strength of the group’s balance sheet and growth prospects, Glanbia has materially increased its 2017 dividend and revised its ongoing target dividend pay-out ratio to between 25% and 35% of annual adjusted EPS.

“Wholly-owned revenue from continuing operations of €2,387.1 million – up 9.2% on 2016 figures (€2,231.7 million).

Bumper year for Performance Nutrition

Glanbia Performance Nutrition delivered revenue growth of 13.7% constant currency, with like-for-like branded sales growth of 6.3% and EBITA of €169.7 million. This is a 7% increase on the previous year, constant currency.

Meanwhile, Glanbia Nutritionals delivered revenue growth of 5.4% constant currency and EBITA of €113.5 million – a 4.1% increase on the year prior, constant currency. This was driven by a good performance from Nutritional Solutions, according to the group.

There was a strong result recorded for the year from joint ventures with a share of profits pre-exceptionals of €42.8 million.

This was up €16.8 million (up 64.6% reported) – primarily driven by higher dairy markets and volume growth.

Finally, the group’s net debt reduced by €69.8 million to €367.7 million at year end in 2017; this gives a net debt-to-EBITDA ratio of 1.07.