- Adjusted Earnings Per Share: Grew by 12.4% to $68.2.
- Group Revenue: $1.8 billion, down 1.1% on a constant currency and pro forma basis.
- Volume Growth: 3.1% in Glanbia Performance Nutrition and Nutritional Solutions.
- Optimum Nutrition Volume Growth: 11.8% in the first half.
- Revenue from Flavor Producers Acquisition: $120 million.
- Share Buybacks: $50 million returned to shareholders, with an additional $50 million buyback program commencing.
- Interim Dividend Increase: 10% increase announced.
- GPN EBITDA: $156 million, up 13.3% constant currency.
- GPN EBITDA Margin: 17.7%, an increase of 420 basis points over prior year.
- Nutritional Solutions Revenue Growth: 3.5% in the first half.
- Nutritional Solutions EBITDA: $82.9 million, down 0.5% constant currency.
- Group EBITDA: $262 million, up 12.8% constant currency.
- Group EBITDA Margin: 14.4%, up from 12.6% in prior year.
- Operating Cash Flow: $99 billion for the first half, $503 million for the 12 months to June.
- Net Debt: $645 million, compared to $451 million last year.
- Net Debt to EBITDA Ratio: 1.2 times, expected to be around 1 times by year end.
- Capital Expenditure: $45 million in the first half, expected to be between $80 million and $90 million for the full year.
- Interim Dividend: Increased from EUR14.22 to EUR15.64.
- Profit After Tax of Joint Ventures: $3.7 billion, down $2.8 billion compared to prior year.
- Net Finance Costs: $10.4 million, up over $3 million compared to prior year.
- Effective Tax Rate: 16%, up from 14% in the prior year.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adjusted earnings per share grew by 12.4% to $68.2, driven by strong consumer demand.
- Glanbia Performance Nutrition and Glanbia Nutritional Solutions both delivered volume growth of 3.1% in the first half.
- Optimum Nutrition brand saw an 11.8% volume growth in the first half.
- Completed the acquisition of flavor producers, significantly expanding flavor offerings with revenue in excess of $120 million.
- Returned $50 million to shareholders via share buybacks and announced a further $50 million share buyback program along with a 10% increase in interim dividend.
Negative Points
- Slim-Fast brand faced significant headwinds with a 34% decline in like-for-like revenue in the first half.
- Group revenue for the half year was down 1.1% on a constant currency and pro forma basis.
- US Cheese EBITDA was down 22% compared to the prior year due to lower market pricing and lapping procurement benefits.
- Higher finance costs due to increased debt following the flavor producers acquisition.
- Challenges in the specialty channel and competitive dynamics in the online channel in Europe impacted performance.
Q & A Highlights
Q: Can you talk us through the building blocks behind the like-for-like guide change in GPN? Are you seeing any changes in consumer behavior? And can you discuss the competitive dynamics in the online channel in Europe?
A: Slim-Fast is a significant drag due to challenges in the diet category and distribution losses. The specialty channel also faced more drag than expected. In Europe, the competitive environment, particularly in the UK, has been quite promotional. We are being cautious with our pricing, which includes tactical adjustments for high input costs last year. Regarding consumer behavior, we have not seen a pullback; our protein brands remain essential items for consumers.
Q: What is the reason for the performance in the ready-to-eat (RTE) and ready-to-drink (RTD) formats? Is Slim-Fast masking solid growth in the rest of the portfolio?
A: Powder formats are our primary growth driver due to better affordability and efficiency. Slim-Fast is the main driver of underperformance in RTE and RTD formats. Our other brands, like Think!, are doing well, but Slim-Fast's decline impacts the overall performance in these categories.
Q: Should we assume that H2 margins will be the run rate going forward, or are there factors that might see a return to the 16% to 16.5% range for FY24?
A: It's too early to call for FY25 margins. We are happy with our H1 margin of 17.7% and have guided down for H2 due to higher whey prices. We have several levers to pull, including pricing, marketing investment, and revenue growth management, which we will evaluate as we move into the latter part of 2024.
Q: Can you provide more color on the softness in the US specialty channel and whether it will continue for the remainder of the year?
A: The softness in the specialty channel is primarily due to lower footfall at key customers. We expect the drag to be less significant in H2 due to softer comps. We remain supportive of these key customers and hope they can rectify their performance challenges.
Q: What are the assumptions behind the H2 pricing expectation within GPN?
A: We expect a 3% pricing decline for the full year, slightly higher than the 2% to 3% previously guided. This is due to some tactical pricing adjustments in H1. We anticipate more rational promotional activity in H2 as higher costs impact all competitors.
Q: Can you discuss the distribution gains and velocities you mentioned?
A: We target growth through a mix of velocity, distribution, and innovation. In the US, we have increased distribution by 30 percentage points, with new shelf sets going in over the next few months. In Europe, we have seen significant new listings, such as with Carrefour, adding 20,000 new points of distribution.
Q: What is the outlook on input costs for GPN for 2025, particularly regarding whey and cocoa?
A: Whey is a key driver of input costs, and we expect higher prices going into 2025. Cocoa is also a significant input, and we are evaluating the need for different pricing strategies. We will have a clearer view on 2025 costs later in the year.
Q: Can you clarify the tactical pricing in GPN and discuss the competitive pricing landscape?
A: The tactical pricing adjustments are specific to our creating product group, which saw significant input cost deflation last year. We have seen increased promotional activity in Q2, particularly in the online DTC channel in Europe, and have reacted to defend our market share.
Q: Can you provide more details on the international side of GPN, particularly regarding share gains and promotional activity?
A: We have seen good growth in China, India, and the Middle East. Europe faced some challenges due to competitive dynamics in the DTC channel. Overall, our international performance is driven by a mix of share gains, promotional activity, and market growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
