Glanbia plc has announced heavily reduced profits for 2020 following a challenging year dominated by the impact of Covid-19.
In its preliminary results for the 2020 financial year, the Irish agri-food giant said it “navigated Covid-19 well” with the business portfolio “delivering a resilient performance in 2020”.
However, total operating profit for 2020 was €114.2 million – down sharply on the 2019 equivalent of €176.8 million.
The company also revealed its new sustainability strategy, dubbed “Pure Food + Pure Planet”.
2020 results
Revenue of €3.82 billion was reported, compared to €3.88 billion reported for 2019, which is down 1.4% on a reported basis but up 0.6% constant currency on the prior year.
This, the plc says, is primarily related to challenges associated with Covid-19 in Glanbia Performance Nutrition (GPN) in the second quarter of last year; improving trends resulted in the delivery of €124.6 million EBITA in the second half 2020, it was noted.
An operating cash flow of €334.8 million was announced for last year, compared to 2019’s €279.9 million. This had a 122.4% cash conversion rate.
There were contrasting fortunes for the plc’s two divisions: Glanbia Nutritionals (GN) drove like-for-like revenue growth of 10.0% constant currency on prior year; while GPN, impacted by Covid-19 restrictions, delivered like-for-like revenue decline of 13.3%, constant currency.
Joint ventures delivered a strong performance with reported share of profits up €13.0 million to €61.6 million.
Basic EPS, meanwhile, of 48.72c were revealed, compared to 61.04c the previous year.
Profit after tax for last year was €143.8 million, down well on 2019’s €180.2 million, while exceptional items after tax were €31.5 million, again a reduced figure on 2019’s €34.6 million.
However, Glanbia described its group as being in a “strong financial position” with net debt reduced by €120.4 million versus the prior year to €493.9 million; net debt to adjusted EBITDA ratio of 1.70 times
The group’s share buyback programme of up to €50 million successfully launched in the final quarter of 2020 and remains ongoing in 2021.
The plc’s total dividend was maintained at 2019 levels, representing a payout ratio of 36.1% ahead of the target range of 25% to 35% due to strong cash flow. The recommended final dividend per share was 15.94c, and the total 2020 dividend 26.62c.
On the environmental, social and governance front, the group said that “significant changes” to the board composition were proposed to facilitate the “increased board diversity with a group-wide diversity and inclusion strategy launched”.
Commenting today, Siobhán Talbot, group managing director, said:
“I am exceptionally proud of how our people responded to the many challenges of Covid-19.
“We also maintained delivery of our strategic agenda by making significant progress on GPN’s transformation programme; keeping all major projects on track, which included the completion of construction of two new large-scale JV plants; completing the Foodarom acquisition in GN; and launching a €50 million share buyback programme to enhance shareholder returns whilst maintaining our dividend level.
This pandemic is by no means over and we remain vigilant in managing the risks associated with it but we are confident that earnings growth will be restored in 2021.
“Our full year adjusted EPS was down 14.9% on a constant currency basis versus the prior year as a good start to 2020 was severely impacted by Covid-19 in the second quarter but improved market conditions and focused actions drove a sequential improvement in earnings in the second half of 2020.
Pure Food + Pure Planet strategy
“Today we also outline the evolution of our sustainability strategy ‘Pure Food + Pure Planet’,” Talbot announced.
As part of this strategy, we are signing up to Science Based Targets and aiming to reduce manufacturing emissions by 30% and supply chain emission intensity by 25% by 2030, while achieving net zero carbon emissions no later than 2050.
“We also launched our diversity and inclusion strategy which will continue to foster a strong and inclusive culture in our organisation.
“We expect the disruptive impact of Covid-19 will abate during the course of 2021 and based on this we expect adjusted EPS to increase by 6% to 12% on a constant currency basis in FY 2021 with growth driven by both wholly-owned businesses of GPN and GN,” the managing director concluded.