Glanbia has reported a double-digit decline in profits for its 2020 financial year, as COVID-19 affected all areas of the business over the past 12 months.
Announcing full-year results on Wednesday morning, Glanbia reported a 35% decline in operating profits for 2020 to just over €114m, as operating profit margins narrowed from 4.6% in 2019 to a very modest 3% last year.
Glanbia reported a 27% decline in earnings (EBITA) for 2020 to €175m, as earnings margins narrowed to just 4.6%.
Adjusted earnings per share (EPS) fell 16% last year to 73.8c per share.
Overall, Glanbia recorded total group sales of €3.8bn in 2020, which was down just 1% in the year.
Glanbia said a near 4% increase in sales prices was offset by a 2% decline in sales volumes last year.
The group’s net debt was reduced 20% in the year to just under €495m, leaving Glanbia with a modest debt to profits ratio of just 1.7 times.
Glanbia stated the sharp decline in profits for 2020 was primarily driven by a very tough year for its flagship performance nutrition division, but also included exceptional charges of €32m.
These exceptional charges were mostly driven by restructuring costs in Glanbia’s performance nutrition division.
The group had previously unveiled a multi-year turnaround plan for the division.
Glanbia’s performance nutrition is made up of a portfolio of consumer facing health brands made from whey, including Optimum Nutrition, Isopure and Body & Fit. The division also includes its recently acquired Slimfast brand.
With gyms closed and most team sports cancelled for extended periods last year due to COVID-19, Glanbia’s performance nutrition division recorded a 17% drop in sales of these brands to €1.1bn, while profits (EBITA) slumped almost 40% year on year to €91m. Margins in the business weakened to just 8% last year.
However, after a very difficult first half of 2020, Glanbia said its performance nutrition division recorded positive trends in the second half of the year for both sales and profits.
US cheese boost
In contrast, Glanbia’s nutritionals division recorded a more robust performance in 2020.
Full-year sales for Glanbia’s nutritionals division were up 7% year on year to €2.7bn, thanks to a very strong performance from its US cheese business.
Despite the healthy sales growth, profits (EBITA) in the division fell 8% to just under €120m in 2020, as profit margins narrowed to 4.4%.
Glanbia plc saw a sharp increase in its share of profits from a number of joint venture businesses it holds a stake in.
Overall, profits from joint ventures increased 27% in 2020 to just under €62m, which is a very strong contribution to Glanbia’s bottom line.
Glanbia’s joint venture businesses includes MWC Southwest in the US, Glanbia Cheese EU, Glanbia Cheese UK and Glanbia Ireland, which buys milk from Irish milk suppliers.
Although 2020 proved to be another challenging year for the group, Glanbia has maintained its full-year dividend at 26.6c per share.
This will see the group pay out close to €78m in dividends later this year, with almost €25m of this going to the farmer-owned Glanbia Co-op.
Glanbia has issued a positive outlook for 2021. The group is forecasting a 6% to 12% increase in profits (EPS) for the year, which it says will be driven by a recovery in sales and profits in both of its core divisions, performance nutrition and nutritionals.