Glanbia FYR 2023 - Strong performance with adjusted EPS growth of 20.5% constant currency
The preliminary results of Glanbia plc for the 2023 financial year (ended 30 December 2023), show that the group delivered a strong financial and operating p e r formance and resultingly, despite the challenging global environment, highlights the strength of its consumer focused Better Nutrition portfolio, which is expected to drive growth in 2024 and beyond.
As announced on 1 March 2023, the group has changed its presentation currency from euro to US dollar, with all figures presented in US dollar unless stated otherwise, with comparative figures also restated in US dollar.
Group revenue was $5,425.4 million (2022: $5,943.7 million), down 8.7% constant and reported currency, primarily driven by dairy pricing. Group EBITA ( before exceptional items) was $424.0 million (2022: $365.7 million), up 16.4% constant currency (up 15.9% reported). Group pre-exceptional profit after tax for continuing operations was $298.1 million (2022: $248.0 million), up 21.1% constant currency (up 20.2% reported).
Adjusted earnings per share (“EPS”) was 131.37 $cent (2022: 109.57 $cent), up 20.5% constant currency (up 19.9% reported). Balance sheet and financing
The Group’s continued focus on cash management delivered a strong performance with an Operating Cash Flow of $445.9 million (2022: $374.3 million), which represents an OCF conversion of 90.4% (2022: 85.7%). At year end, the Group had a net debt position of $248.7 million (2022: $490.0 million) with the decrease driven by strong cash generation, the sale of the Group’s interest in the Glanbia Cheese UK and EU joint ventures and a disciplined approach to capital allocation.
CAPITAL INVESTMENT
Glanbia’s total investment in capital expenditure (tangible and intangible assets) was $74.2 million in 2023 (2022: $72.5 million). Strategic investment totalled $51.7 million and included ongoing capacity enhancement, business integrations, and IT investments to drive further efficiencies in operations. Total capital expenditure for 2024 is expected to be $75 million to $85 million. Glanbia’s ability to generate cash and its available debt facilities ensure the Group has considerable capacity to finance future investments.
DIVIDEND PER SHARE
The Board is recommending a final dividend of 21.21 €cent per share which brings the total dividend for the year to 35.43 €cent per share, a 10% increase on prior year. This total dividend represents a payout ratio of 29.2% of 2023 adjusted EPS, which is within the Company’s target payout ratio of 25% to 35%. The final dividend will be paid on 3 May 2024 to shareholders on the share register on 22 March 2024.
SHARE BUYBACK
During 2023 Glanbia purchased and cancelled 7,215,827 million ordinary shares, representing 2.7% of total issued ordinary shares at the beginning of 2023, at a total cost of €100 million (2022: €173.5 million). The Company’s Board has approved a further €100 million share buyback authority in 2024 as part of its capital allocation policy. The Group were set to launch an initial €50 million share buyback programme under this authority this week.
The Group remains on track to meet its commitment to reduce Scope 1 and 2 carbon emissions by 50% by 2030 from a 2018 base, delivering a 15.9% reduction of Scope 1 and 2 carbon emissions in 2023 versus the previous year.
During 2023 the Group continued to sharpen its focus on its core better nutrition growth platforms and simplify its reporting structure and remains confident in delivering the financial ambition outlined at the Capital Markets event in November 2022.
STRONG CONSUMER DEMAND
Commenting on the preliminary results, Hugh McGuire, chief executive officer, said that the ‘excellent performance’ in 2023 was “driven by strong global consumer demand, with Optimum Nutrition continuing its growth momentum, delivering volume and price growth in the period”.
“Our strong operational and financial performance continued to generate excellent cash flow, with 90.4% cash conversion in the year. We continued to evolve our portfolio with the acquisition of a bioactive ingredients business and the sale of our share of Glanbia Cheese joint ventures. We increased the dividend by 10% and returned €100 million to shareholders via our share buyback programme,” he said.
2024 OUTLOOK
Based on the current market environment and expectations for the remainder of the year the Group outlines the following guidance for
FY 2024: Glanbia Performance Nutrition (GPN) expects to deliver 4% to 7% revenue growth.
Glanbia Nutritionals - Nutritional Solutions (GN NS) expects to deliver 3% to 5% volume growth. EBITDA margins for GPN and GN NS to be sustained at least at the same level as 2023. Also, the Group is targeting an operating cash flow conversion rate of 80%+.
Glanbia expects to deliver adjusted EPS growth of 5% to 8% constant currency in 2024.