Glanbia expects ingredients to outperform performance nutrition in years ahead

Glanbia has outlined ambitious plans to grow revenue by 39% to over €5bn by 2022. The group has sales of €3.6bn today across its three divisions of performance nutrition, ingredients and joint ventures. Group managing director Siobhan Talbot said: “The group is well positioned to capture growth from global consumer nutrition trends related to health and wellness, active lifestyles and clean ingredients.”

Main focus

Overall,Glanbia says it will focus on a combination of organic growth and selective mergers and acquisitions to achieve its growth, which also aims to achieve a five-year average adjusted earnings per share growth of 5% to 10% (constant currency). The group is also looking for an annual return on capital employed of 10% to 13%, with an annual operating cash conversion of greater than 80%.

Glanbia owns the top portfolio, globally, of performance nutrition brands. It has served the business well over the last 10 years as it played into an expanding and high-margin market. This division now generates revenues in excess of €1.1bn with (EBITA) margins in the mid-teens.

It has grown mainly by acquiring eight key businesses including Optimum Nutrition, BSN, Isopure and Thinkthin since 2008. The group has outlined that it has ambitions to add another 45% to sales by 2022, with an average margin over the five years of 13% to 15%. The group claims to have 13% of the €13bn global market, with 66% of this in North America.

Ingredients

But it is the group’s ingredients business (nutritionals) where it sees the most growth. Although it is a smaller division (roughly about half the size of the performance nutrition business), it sees its ingredients business growing by 60% to become a €0.8bn business by 2022. It also expects it to become a higher-margin business than performance nutrition and is targeting an average margin of 14% to 16%. It aims to scale its flavours and plant nutrition businesses along with leveraging its protein capability into healthy snacking.

Despite Glanbia, along with its joint venture Southwest Cheese, being the largest producer of American-style cheddar cheese and holding a 20% share of the US cheddar cheese market, it is not expecting to see much growth from its wholly owned division – US cheese.

While it produces 470,000t of cheese today, it aims to produce 602,000t by 2022. It has moved to build on the joint venture operating model pioneered at Southwest Cheese and now moving into Michigan.

It is expecting to see 46% growth in its joint ventures which includes Glanbia Ireland. It expects this division to reach sales of €1.9bn by 2022.

Shares in Glanbia are down 15% in the last 12 months and closed on Monday at €15.29.