Dairy and sports nutrition group Glanbia said its half-year results had ‘exceeded’ expectations and were the result of measures the company had put in place to address ‘unprecedented’ inflation last year.
Group profit after tax for the half year was €184.3m compared to €81.3m in HY 2021. Revenue increased by 26.8% on a constant currency basis to €2.8 billion, an increase of 38.5% on a reported basis. Basic EPS increased by 137% on HY 2021, with FY 2022 adjusted EPS expected to land between 9%-13% and 21%-25% if current foreign exchange rates are sustained.
The company also reported it has sold its minority shares in Glanbia Ireland, which totaled 40% and were worth €307m. The resulting gain on disposal of the investment totaling €55.9m was treated as an exceptional item.
US cheese performs, but NS dairy portfolio is outperformed
From all divisions, Glanbia Nutritionals (NS) recorded the strongest revenue growth of 32.2% constant currency (up 44.9% reported) year on year. This was driven by volume increase of 5.1%, mainly due to strong performance of the non-dairy ingredients portfolio and US cheese.
The sub-division Nutritional Solutions grew by 24.9% in revenue thanks to increase in volume (1.6%), increase in price (17.9%) and the acquisitions of contract food manufacturer PacMoore and bioactive solutions maker Sterling Technology, which added 5.4%. The non-dairy portfolio outperformed the dairy offerings in H1, and EBITA was 14.4% higher at €71.7m.
For US cheese, a price increase of 28.8% as well as in volume (6.6%) led to a revenue growth of 35.4% in HY 2022. The volume increase is attributed to the company’s new joint-venture plant in Michigan.
Glanbia Nutritionals’ pre-exceptional EBITA increased by 15.5% constant currency (up 28.3% reported) while pre-exceptional EBITA margin decreased from 5.0% to 4.4% since HY 2021. In FY 2022, a 'strong double-digit percentage revenue growth' is expected.
New branding for SlimFast in sight for 2023
Glanbia Performance Nutrition (GPN) meanwhile recorded a decrease of 18.1% in pre-exceptional EBITA, with pre-exceptional EBITA margin reduced to 10.4% from 14.1% since HY 2021. Revenue increased by 14.9% on HY 2021 driven by price and volume increases as well as the LevlUp acquisition; branded like-for-like revenues increased by 15.8%.
SlimFast volume declined by 12.1%, however, with plans afoot to address the 'continuing headwinds in the diet category'.
In the Americas, Glanbia is working on a brand refresh for SlimFast. New branding including a new pack design is set to be unveiled in the second part of 2022 and will be in place for the early 2023 diet season.
Globally, Optimum Nutrition grew by 23.2% while think!, Isopure and Amazing Grass (28.1%) also recorded both volume and pricing growth.
In FY 2022, GPN expects to deliver low teens percentage revenue growth.
Jefferies upgrades FY EPS forecast
Jefferies has upgraded FY 2022 EPS for Glanbia by 4% based on the nutrition company's strong half-yearly results. The investment bank expects share prices to land in the upper end of its forecast, at 13% and 24% for constant and actual respectively. Glanbia also delivered ‘the strongest pricing in their history’ according to Jefferies, reflecting ‘improved commercial execution and focus against a background of a more orderly market’.
“The key question for us…was the guidance raise was so modest (MSD at constant fx) relative to the big H1 beat," commented equity analyst Martin Deboo. "Worth bearing in mind then that [Glanbia] need to turn a c.4% EBITA decline at constant FX in H1 to a 12% increase in H2 in order to make the mid-point. Relative to which they are understandably cautious amidst the uncharted waters of mid-teens pricing and potential negative elasticity. Ultimately, we think strong pricing momentum, relative to a hedged position in whey, should be capable of delivering at the top end of the new range, and potentially beyond."
