Glanbia positioned for growth in 2021
Global nutrition group Glanbia plc, announced on Wednesday its preliminary results for the 2020 financial year, ended 2 January 2021.
The results indicate a solid top line with revenue of €3,823.1 million (2019: €3,875.7 million), up 0.6% constant currency on prior year (down 1.4% reported).
According to the principal risks and uncertainties faced by the group, ‘no new principal risks were identified during the year and while many of the principal risks noted prior to the pandemic remain the same in substance, they have been amplified by the impact of the virus’. A Covid-19 project team was immediately put in place to assess these threats and ensure appropriate incident and response plans are in place.
As a provider of essential services, the group has been able to keep its supply chains, manufacturing plants and distribution networks operating effectively during the pandemic. However, similar to other companies, the group has experienced operational and market related challenges associated with Covid19, with direct Covid-19 impacts including areas such as ‘ reduced profitability, supply chain challenges, increased workforce planning requirements and negative impacts to the credit quality/ liquidity of some of our customers and suppliers’.
One of the real positives noted, was ‘the strength of its I.T. and digital infrastructure which operated relatively seamlessly with the significantly increased number of employees working remotely’.
Overall, the group navigated Covid- 19 well with the business portfolio delivering a resilient performance in 2020, with a strong operating cash flow of €334.8 million (2019 €279.9 million); 122.4% cash conversion rate. Like-for-like, revenue grew 1.8% constant currency on the prior year.
A ‘robust performance’ from Glanbia Nutritionals (“GN”) drove like-for-like revenue growth of 10.0% constant currency on the prior year. While Glanbia Performance Nutrition (“GPN”) impacted by Covid-19 restrictions, in particular in Q2, delivered likefor-like revenue decline of 13.3%, constant currency.
STRONG FINANCIAL POSITION
Pr e-exceptional EBITA of €209.6 million in full year 2020 (FY 2019: €276.8 million) was down 22.6% constant currency ( down 24.3% reported); primarily related to challenges associated with Covid-19 in GPN in Q2; improving trends resulted in delivery of €124.6 million EBITA in the second half 2020.
The preliminary results show the group to be in a strong financial position, with net debt reduced by €120.4 million versus prior year to €493.9 million - net debt to adjusted EBITDA ratio of 1.70 times. A share buyback programme of up to €50 million successfully launched in Q4 2020 and is ongoing in 2021.
Profit after tax of €143.8 million (2019: €180.2 million) is reported, with exceptional items after tax of €31.5 million (2019: €34.6 million). Adjusted earnings per share (EPS) of 73.78 cent (2019: 88.10 cent) was down 14.9% constant currency ( down 16.3% reported). Basic EPS of 48.72 cent (2019: 61.04 cent). A total dividend is maintained at 2019 levels, representing a payout ratio of 36.1% ahead of target range of 25% to 35% due to strong cash flow. The recommended final dividend per share is 15.94 cent, the total 2020 dividend is 26.62 cent.
Joint Ventures delivered a strong performance with reported share of profits up €13.0 million to €61.6 million.
Elsewhere, the report notes strong progress has been made on the group’s environmental, social and governance (ESG) agenda. Significant changes to the board’s composition are proposed to facilitate increased board diversity with a group-wide Diversity and Inclusion strategy launched. On the Environmental agenda, targets are now in place for the reduction of carbon emissions.
Noting a positive outlook in the financial year 2021, the group expects to deliver 6% to 12% growth in adjusted EPS, constant currency, driven by wholly-owned businesses, GPN and GN.
‘ROBUST OPERATING PERFORMANCE’
Commenting on Wednesday, Siobhán Talbot, Group Managing Director, said: “I am exceptionally proud of how our people responded to the many challenges of Covid-19. Throughout the pandemic, we lived our purpose and our values, delivering essential, nutritious food during the most challenging of circumstances and proving the resilience of our business. We delivered on our priorities of protecting our people, continuing the supply of food and maintaining our strong financial position. We kept our operations running safely with the aid of enhanced health and safety measures.
“Our business portfolio delivered a robust operating performance supported by our swift and decisive actions which resulted in improving trends across the group in the second half of the year”.