Glanbia Regulatory News (GLB)

Glanbia Full Year 2022 results

Strong performance, with Group revenue up 21.2% and adjusted EPS1 up 17.6%, ahead of expectations (both constant currency)

1 March 2023 - Glanbia plc ("Glanbia", the "Group", the "Company", the "plc"), the better nutrition company, announces its preliminary results for the 2022 financial year ended 31 December 2022 ("Full Year 2022", or "2022").

Key highlights:

· Group revenues of €5.6 billion (2021: €4.2 billion) representing growth of 21.2% constant currency (up 34.4% reported);

· Group EBITA pre-exceptional €347.1m (2021: €270.6m), an increase of 13.5% constant currency (up 28.3% reported);

· Adjusted earnings per share1 ("EPS") of 104.02 cent (2021: 77.84 cent) representing growth of 17.6% constant currency (up 33.6% reported);

· Basic EPS of 93.42 cent (2021: 57.57 cent);

· Operating cash flow conversion of 85.7% and year end net debt to adjusted EBITDA ratio of 1.12 times (2021: 1.71 times);

· Glanbia Performance Nutrition ("GPN"):

o  Branded like-for-like revenue +14.6% with pricing +16.7% and volume -2.1%;

o  Optimum Nutrition ("ON") brand delivered US consumption growth2  of 30.8% for the 52 week period;

o  EBITA growth of 10.5%; EBITA margin 11.2% (+10bps versus prior year);

· Glanbia Nutritionals - Nutritional Solutions ("GN NS"):

o  Like-for-like revenue +12.6% with pricing +16.1% and volume -3.5%;

o  EBITA growth of 13.0%, EBITA margin 11.4% (-10bps versus prior year);

· Continued progression on ESG agenda with further reductions targeted by 2030 in Scope 1 and 2 carbon emissions;

· Capital allocation:

o  Returned €173.5 million to shareholders in the year via share buybacks;

o  Further €50 million share buyback programme announced, reflecting the Group's strong cash flow and financial position;

o  Recommended final dividend per share of 19.28 cent; total 2022 dividend 32.21 cent; a 10% increase on prior year, representing a payout ratio of 31.0%;

· The Group continues to focus on its better nutrition portfolio and today announces the proposed sale of its interest in the Glanbia Cheese JVs. During 2022, the Group acquired Sterling Technology, which complements the GN NS portfolio, and completed the disposal of its interest in Glanbia Ireland; and

· Glanbia expects to deliver adjusted EPS growth of 5% to 10% constant currency in FY 2023.

Commenting today Siobhán Talbot, Group Managing Director, said:

"On behalf of the Glanbia team, I am pleased to report that Glanbia delivered its highest ever annual earnings rformance in 2022 with adjusted EPS1 growing by 17.6% to 104.02c. This was achieved despite unprecedented inflationary headwinds and was led by the strong performance of the Optimum Nutrition brand, growing US consumption2 by 30.8% in 2022, and continued good delivery by our GN Nutritional Solutions business. This 2022 result underpinned the delivery of the Group targets set out in 2018 for the period 2018 to 2022. Looking forward, our strategic focus on 'better nutrition' growth platforms is clear and we are confident that it will drive sustained growth in the coming years, delivering the targets set out at our recent capital markets event.

We are aligning our portfolio to our strategy - completing the sale of the plc's stake in Glanbia Ireland and adding new capability with the acquisition of Sterling Technology in 2022. In addition, today we are announcing that we have signed a non-binding memorandum of understanding for the sale of the plc's holding in the Glanbia Cheese joint ventures to our joint venture partner, Leprino Foods. This continued evolution of our portfolio will enable Glanbia to focus on driving growth through our focused market leading positions as a better nutrition company, playing into strong underlying consumer health and wellness trends.

As a purpose led company, we continue to make progress on our ESG agenda, increasing the ambition of our carbon reduction targets and building on the strong inclusive culture of Glanbia through our Diversity, Equity and Inclusion ("DE&I") strategy.

We reaffirm the financial targets for the period 2023 to 2025 as set out at the recent capital markets event. With a strong balance sheet, our ambition for 2023 and beyond is to focus on our better nutrition strategy, investing and growing our Glanbia Performance Nutrition and GN Nutritional Solutions businesses. In 2023, we expect adjusted EPS growth of 5% to 10% constant currency, which will be driven by a strong operating performance in the better nutrition businesses."

1 Adjusted earnings per share for continuing operations

2 Consumption growth is US measured in channels and includes Online, FDMC (Food, Drug, Mass, Club) and Specialty channels. Data compiled from published external sources and Glanbia estimates for the 52 week period to 1 January 2023

Summary financials1

1. This release contains certain alternative performance measures. Detailed explanation of the key performance indicators and non-IFRS performance measures can be found in the glossary on pages 35 to 42.

2. To arrive at the constant currency change, the average exchange rate for the current period is applied to the relevant reported result from the same period in the prior year. The average euro US dollar exchange rate for 2022 was €1 = $1.053 (2021: €1 = $1.183). Reported and constant currency movements are on a pre-exceptional basis.

3. EBITA is defined as earnings before interest, tax and amortisation.

4. Continuing operations: The Glanbia Ireland joint venture was classified as a discontinued operation on 17 December 2021. Results presented for continuing operations excludes the impact on the Group of the Glanbia Ireland joint venture. Discontinued operations reflects the contribution from the Glanbia Ireland joint venture. Prior year comparatives have been restated on the same basis.

5. Profit after tax includes the exceptional gain on disposal relating to Glanbia Ireland.

6. Adjusted earnings per share includes the contribution of continuing and discontinued operations.

FY 2022 results summary

2022 full year overview

Glanbia delivered a strong financial and operating performance in 2022. Group revenue was €5,642.4 million (2021: €4,196.9 million), up 21.2% constant currency (up 34.4% reported). Group EBITA was €347.1 million (2021: €270.6 million) up 13.5% constant currency (up 28.3% reported). Group profit after tax for continuing operations for the period was €199.6 million (2021: €141.0 million) up €28.6 million constant currency (up €58.6 million reported).

Adjusted earnings per share ("EPS") for continuing operations was 104.02 cent (2021: 77.84 cent) up 17.6% constant currency (up 33.6% reported).

Balance sheet and financing

The Group's continued focus on cash management delivered a strong performance with an operating cash flow of €355.3 million (2021: €334.2 million), which represents an OCF conversion of 85.7%. At the year end the Group had a net debt position of €459.4 million (2021: €602.7 million) with the decrease driven by the strong cash conversion and disciplined approach to capital allocation. Net debt to adjusted EBITDA was 1.12 times (2021: 1.71 times). In December 2022, the Group renewed its debt facilities, and at the year end had committed debt facilities of €1.22 billion (2021: €1.16 billion) with a weighted average maturity of 5.8 years (2021: 3.9 years).

Capital investment

Glanbia's total investment in capital expenditure (tangible and intangible assets) was €68.9 million in 2022 (2021: €77.5 million). Strategic investment totalled €49.5 million and included the investment in IT infrastructure to support a global transformation of the Group's HR systems and operating model. Total capital expenditure for 2023 is expected to be €70 million to €80 million. Glanbia's ability to generate cash and its available debt facilities ensure the Group has considerable capacity to finance future investments.

Dividend per share

The Board is recommending a final dividend of 19.28 cent per share which brings the total dividend for the year to 32.21 cent per share, a 10% increase on prior year. This total dividend represents a payout ratio of 31.0% of 2022 adjusted EPS, which is within the Board's target of 25% to 35%. The final dividend will be paid on 5 May 2023 to shareholders on the share register on 24 March 2023. Irish withholding tax will be deducted at the standard rate where appropriate.

ESG update

Glanbia continues to deliver good progress against its environmental, social and governance ("ESG") agenda. ESG targets were formally adopted by shareholders into the remuneration policy and have been adopted as part of the short-term and long-term incentive structures for the senior leadership teams.

· Environmental - Glanbia recently completed a process to re-align its Scope 1 and 2 decarbonisation targets with a 1.5 degree pathway. The revised ambition is for a 50% reduction (previously a 31% reduction) in Scope 1 and 2 carbon emissions by 2030 from a 2018 base. The Group has also strengthened its improvement targets across water, waste and packaging impacts.

· Social - Glanbia's Diversity, Equity & Inclusion ("DE&I") agenda progressed further during the year with a number of initiatives, including an inclusive leadership development programme for senior leaders, additional employee resource groups for multicultural and LGBTQ+ employees, and other inclusion oriented HR policy measures.

· Governance - Board changes during the year increased female Board representation to 36%.

Board update

In line with the relationship agreement with Glanbia Co-operative Society Limited (the "Society") Patsy Ahern and John Murphy have announced their intention to retire at the upcoming AGM on 4 May 2023, reducing the Society's representation on the Board to three directors.

Change in presentation currency to US Dollar

Glanbia generates over 80% of its revenue and earnings, and has significant assets and liabilities denominated in US Dollars. To reduce the potential for foreign exchange volatility in future reported earnings, the Group has decided to change its presentation currency to US Dollar effective from 1 January 2023. Financial restatements will be provided in advance of our Q1 trading update.

Strategy

Glanbia's ambition is to deliver focused, scalable growth aligned with enduring consumer mega-trends around health and wellness. The Group held a Capital Markets event in November 2022, highlighting its continuing focus on better nutrition to support healthy lives through specialist consumer brands and ingredients. The event outlined Glanbia's growth agenda and provided an overview of the strategies in its better nutrition growth platforms, GPN and GN NS. In recent years the Group has both reorganised its business operating models to drive sustained organic growth and reshaped its portfolio to sharpen its focus on these growth platforms with the following portfolio optimisation initiatives:

· Nutritional Solutions:

o On 11 March 2022, Glanbia acquired Sterling Technology, LLC ("Sterling"), a bioactive ingredient company based in South Dakota, USA for a purchase price of $60 million plus deferred consideration.

o  The Group is in advanced discussions to divest Aseptic Solutions, a small non-core US bottling facility. The transaction is expected to complete in the first half of 2023.

· Joint Ventures:

o  On 1 April 2022, Glanbia completed the disposal of its 40% interest in the Glanbia Ireland joint venture ("Glanbia Ireland") to the Society for €307 million.

o  Today, the Group has announced that a memorandum of understanding has been signed for the sale of its shareholding in the Glanbia Cheese EU and Glanbia Cheese UK joint ventures ("Glanbia Cheese") to Leprino Foods Company. It is expected that Glanbia will receive initial cash proceeds in excess of €160 million (including the repayment of shareholder loans), with further contingent consideration of up to €25 million dependant on the performance of Glanbia Cheese over the next three years.

The Group remains confident in delivering the financial ambition outlined at the Capital Markets event in November 2022, which was as follows:

* All Group metrics are average annual metrics for the three years 2023-2025 and include M&A activity.

** Business unit metrics based on organic growth.

Share buyback

During 2022 Glanbia purchased and cancelled 14.9 million ordinary shares, representing 5.2% of total issued ordinary shares at the beginning of 2022, at a total cost of €173.5 million (2021: €91.3 million). Today, the Group has announced a further €50 million buyback programme as part of its broader capital allocation policy.

2023 Outlook

Glanbia remains confident of delivering the financial ambition outlined at the Capital Markets event in November 2022. The Group's strong performance in 2022, despite the challenging global environment, highlights the strength of its consumer focused better nutrition portfolio, which is expected to drive growth in 2023 and beyond.

Based on the current market environment and expectations for the remainder of the year the Group outlines the following guidance for FY 2023:

· GPN expects revenue to grow by 5% to 7% on a constant currency basis, and to deliver full year EBITA margins of 12.5%+. Revenue growth will be primarily driven by pricing, and the business continues to closely monitor consumer demand and customer inventory levels. The EBITA margin guidance is underpinned by the GPN transformation programme, pricing action and the expected reduction of dairy input costs in the second half of the year.

· GN NS expects a decline in like-for-like revenue driven by lower dairy market pricing, with volumes expected to be broadly in line with FY 2022. GN NS EBITA margins are expected to be between 12% and 13%. The volume expectation reflects customer supply chain rebalancing, particularly in the first half of the year.

· Group EBITA growth is expected to be driven largely by growth in GPN. GN NS and US Cheese EBITA are expected to be broadly in line with FY 2022, on a constant currency basis, with the performance in joint ventures expected to be reduced due to the disposal of the Glanbia Cheese JVs.

· The Group is targeting an operating cash flow conversion rate of 80%+ for FY 2023.

Glanbia expects to deliver adjusted EPS growth of 5% to 10% constant currency in FY 2023 with growth weighted to the second half of the year.

2022 operations review

(Commentary on percentage movements is on a constant currency basis throughout)

Glanbia Performance Nutrition

· Like-for-like ("LFL") branded revenue growth of +14.6% with volume -2.1% and pricing +16.7%.

· ON, the leading brand in the sports nutrition sector globally, continues to sustain a strong consumer position in key markets and delivered US consumption growth of 30.8%.

· EBITA margin increase of +10bps versus prior year, despite unprecedented inflation, with 12.0% EBITA margin delivered for the second half of 2022.

Overall GPN revenue increased by 13.9% in 2022 versus prior year. This was driven by volume declines of 2.9%, price increases of 16.4%, and the LevlUp acquisition contributing 0.4%. Excluding the impact of the contract business, which GPN exited in North America, like-for-like branded revenues increased by 14.6% with 16.7% growth in pricing partly offset by a volume decline of 2.1%. Pricing was driven by the execution of strategic price increases across all brands, in all regions, in response to inflationary trends. While volume performance in the ON brand was strong, the overall decline was driven by the SlimFast brand, where the brand refresh is currently in market.

GPN EBITA increased by 10.5% versus prior year to €182.1 million. The GPN transformation programme, the scope of which was increased to help mitigate inflation, is now complete and provides a fundamental underpin to margins as the business moves through the current inflationary cycle. The benefits from this programme, together with the pricing action taken, enabled the business to deliver a 12.0% EBITA margin for the second half of the year.

Americas

GPN Americas delivered 12.3% revenue growth in 2022 compared to the prior year, with like-for-like branded revenue increasing by 13.2%. This was driven by significant pricing actions and revenue growth management initiatives. The ON brand continued to exhibit very strong performance in the period and was supported by continued brand investment and innovation. ON delivered US consumption growth in 2022 of 30.8%. Strong consumption trends in the healthy lifestyle portfolio also continued through the period across the think!, Isopure and Amazing Grass brands, with US consumption in 2022 up 13.9%. The SlimFast brand performance continues to be impacted by headwinds in the overall diet category with US consumption in 2022 down 17.9%. The brand refresh is in market as planned, supported by new branding and pack design, creative content and innovation.

International

GPN International, which includes D2C brands, grew like-for-like revenues by 16.3% in 2022 compared to the prior year. This was driven by volume growth in key regional markets, with consumption trends in Europe, India and Oceania particularly strong. Pricing was positive across all regions due to the execution of multiple price increases in response to inflationary trends.

Glanbia Nutritionals

Nutritional Solutions

· GN NS LFL revenue growth of +12.6% with volumes -3.5% and pricing +16.1%.

· EBITA growth of 13.0%, EBITA margin of 11.4% (10bps behind the prior year).

· Recent acquisitions performed well in the year, building further on innovation and operational capabilities in NS.

GN NS revenues increased by 16.6% in 2022 versus the prior year. This was driven by a 3.5% decrease in volume, 16.1% increase in price and the net impact of acquisitions and disposals delivering 4.0% revenue growth. While the customised premix solutions portfolio delivered volume growth this was offset by a volume decline in the protein solutions business driven largely by supply chain realignment and inventory reduction by customers in the second half of the year. Overall pricing was strong in the year driven by significantly heightened dairy protein market prices.

GN NS EBITA was €128.2 million, 13.0% higher than prior year as margins were sustained at broadly the same level as 2021.

US Cheese

US Cheese revenue increased by 27.7% in 2022 versus the prior year. This was driven by a 4.3% increase in volume and a 23.4% increase in price. Volume growth was driven by expanded production through the new joint venture plant in Michigan, which was commissioned during 2021. Price increases were aligned to the higher year-on-year market pricing.

US Cheese EBITA increased by 33.3% to €36.8 million due to incremental volumes and focus on driving operating leverage and efficiencies.

Joint Ventures (Glanbia share)

Glanbia's principal joint ventures (continuing operations) in 2022 include MWC‐Southwest Holdings, Glanbia Cheese EU and Glanbia Cheese UK. The Group's share of joint ventures' profit after tax pre‐exceptionals for continuing operations decreased by €3.8 million to €15.4 million.

On 1 April 2022, Glanbia completed the disposal of its 40% interest in the Glanbia Ireland joint venture to the Society for €307 million. The transaction was approved by members of the Society on 17 December 2021, following which this joint venture investment was considered as an investment 'held‐for‐sale', with equity accounting ceasing to apply from that date.

As part of the Group's on-going focus on optimising its portfolio, the Group has today announced that it has signed a non-binding memorandum of understanding for the sale of its 50% holding in Glanbia Cheese EU and 51% holding in Glanbia Cheese UK (collectively the "Glanbia Cheese JVs") to Leprino Foods Company. Based on preliminary results for both companies, the Glanbia Cheese JVs contributed approximately €7.3 million to the share of profit after tax of Glanbia equity accounted investees in 2022 (2021: €0.3 million). It is expected that Glanbia will receive initial cash proceeds in excess of €160m (including the repayment of shareholder loans), with further contingent consideration of up to €25m dependant on the performance of the Glanbia Cheese JVs over the next three years. Subject to the satisfactory completion of limited confirmatory diligence, the negotiation of binding transaction agreements and other conditions, it is expected that the deal will close in the first half of 2023.

FULL YEAR 2022 Finance Review

2022 Group income statement

Revenue

Revenue increased in 2022 by 21.2% versus prior year on a constant currency basis to €5.6 billion, an increase of 34.4% on a reported basis. Like-for-like wholly-owned revenue increased by 20.2%, driven by positive pricing of 19.7% and volume increases of 0.5%. The full year impact of the 2021 LevlUp and PacMoore acquisitions, and the recent Sterling Technology acquisition added a further 1.0% to revenue. Detailed analysis of revenue is set out within the operations review.

EBITA (pre-exceptional)

EBITA before exceptional items increased 13.5% constant currency (+28.3% reported) to €347.1 million (2021: €270.6 million) with strong EBITA delivery in both GPN and GN. EBITA margin in FY 2022 was 6.2%, compared to 6.4% in 2021 as a result of unprecedented inflationary trends across the business, net of mitigating actions.

GPN pre-exceptional EBITA increased by 10.5% constant currency to €182.1 million (2021: €145.1 million), an increase of 25.5% on a reported basis. GPN pre-exceptional EBITA margin at 11.2% was 10 basis points higher than prior year reported, with an improving margin profile over the year and delivering 12% margin in H2, 2022.

GN pre-exceptional EBITA grew 16.9% constant currency to €165.0 million (2021: €125.5 million), an increase of 31.5% on a reported basis. GN pre-exceptional EBITA margin was 4.1%, down 20 basis points reported from 2021 as the dilutive impact of higher dairy markets was largely mitigated by improved business mix and operating efficiencies.

Net finance costs (pre-exceptional)

Net finance costs (pre-exceptional items) increased by €3.2 million to €20.7 million (2021: €17.5 million). The increase was primarily driven by increased average debt levels and stronger average US Dollar exchange rates in 2022 compared to 2021. The Group's average interest rate was 2.3% (2021: 3.0%). Glanbia operates a policy of fixing a significant amount of its interest exposure, with 90% of projected 2023 debt currently contracted at fixed rates.

Share of results of joint ventures

The Groups' share of results of joint ventures is stated after tax and before exceptional items. The Group's share of joint venture profits from continuing operations decreased by €3.8 million to €15.4 million (2021: €19.2 million). Operationally, the joint ventures, particularly in the US, delivered a strong performance with year-on-year volume growth, benefiting from the full year impact of the new Michigan facility, following successful commissioning in 2021.

The prior year share of joint venture profits from discontinued operations relate to the Glanbia Ireland investment which was classified as an asset held-for-sale in 2021. Following receipt of all shareholder approvals and regulatory clearances, the disposal was completed in April 2022, with the related once off gain on disposal treated as an exceptional item in the period.

Income taxes

The 2022 pre-exceptional tax charge increased by €6.8 million to €31.4 million (2021: €24.6 million). This represents an effective tax rate, excluding joint ventures, of 12.5% (2021: 13.0%). The tax credit related to exceptional items is €5.7m (2021: €7.6m). The Group currently expects that its effective tax rate for 2023 will be in the range of 13.5% to 14.5%.

Exceptional items

During 2022 there were cash outflows of €21.3 million in respect of exceptional charges. During 2021 there were cash outflows of €55.9 million in respect of exceptional charges incurred in FY 2021 and prior years.

Details of the exceptional items are as follows:

1. Pension related costs relate to the restructure of legacy defined benefit pension schemes associated with the Group and joint ventures, which included initiating a process for the ultimate buyout and wind up of these schemes and a further simplification of schemes that remain. Costs incurred relate to the estimated cost of the settlement loss as a result of acquiring bulk purchase annuity policies to mirror and offset movements in known liabilities of the schemes ('buy-in' transaction), as well as related advisory and execution costs, net of gains from risk reduction activities. The restructuring effort has progressed well during 2022, effectively managing the volatile financial market conditions in the UK during 2022, with final wind up of schemes planned for completion in 2023.

2. Changes in fair value of contingent consideration and call option relates to contingent payments and call option associated with the 2021 LevlUp acquisition that have now reduced following an assessment of conditions that give rise to the additional payments.

3. Prior year organisation redesign costs related to a fundamental reorganisation of the GPN segment to drive greater efficiencies, improve margin and deliver top line growth. The investment phase of this programme is now complete, with no further costs incurred during the period.

4. Portfolio related re-organisation costs relate to indirect one off costs as a result of recent and planned portfolio changes. Following these divestment decisions related to non-core businesses, the Group launched a programme to realign Group-wide support functions and optimise structures of the remaining portfolio, to more efficiently support business operations and growth. This programme will continue into 2023 with realisation of benefits from 2024 onwards. Costs incurred to date relate to advisory fees and people related costs.

5. Non-core assets held-for-sale relate to fair value adjustments to reduce the carrying value of certain assets to recoverable value. The assets relate to a small US based bottling facility (Aseptic Solutions) which, following the completion of a strategic portfolio review, were determined to be non-core and a decision was made to divest the business, resulting in the designation as held-for-sale at year end. Discussions are ongoing, and a sale is expected to conclude in H1, 2023.

6. Exceptional gain from discontinued operations relates to the gain arising on the divestment of the Group's interest in Glanbia Ireland, following its classification as a discontinued operation in 2021. The 2021 gain includes one off gains on the settlement of forward contracts, net of one off re-organisation costs within this joint venture.

Profit after tax

Profit after tax for the year was €256.8 million compared to €167.4 million in 2021, comprising continuing operations of €199.6 million (2021: €141.0 million) and discontinued operations of €57.2 million (2021: €26.4 million). Profit after tax from continuing operations comprises pre-exceptional profit of €235.4 million (2021: €183.8 million) and exceptional charges of €35.8 million (2021: €42.8 million). The €51.6 million increase in pre-exceptional profit after tax from continuing operations is driven by the increased profitability of wholly-owned businesses net of reduced profitability of joint ventures.

Profit after tax from discontinued operations in the current and prior year relates to the Glanbia Ireland joint venture. As outlined above, the Group's share of Glanbia Ireland was disposed in April 2022, with the resulting gain being recognised as an exceptional gain.

Earnings Per Share (EPS)

Basic EPS increased by 62.3% reported versus prior year, driven by a year-on-year increase in pre-exceptional profitability and the exceptional one off gains on portfolio related adjustments.

Adjusted EPS is a Key Performance Indicator (KPI) of the Group, a key metric guided to the market and a key element of Executive Director and senior management remuneration. Adjusted EPS increased by 6.4% constant currency (19.4% reported) in the year, driven primarily by the increased profitability in both GPN and GN, offset by a reduced share of profits of joint ventures. Adjusted EPS comprises continuing operations of 104.02 cent (2021: 77.84 cent) and discontinued operations representing the now disposed Glanbia Ireland joint venture of nil (2021: 9.31 cent).

Cash flow

The principal cash flow KPIs of the Group and Business Units are Operating Cash Flow (OCF) and Free Cash Flow (FCF). OCF represents EBITDA of the wholly-owned businesses net of business-sustaining capital expenditure and working capital movements, excluding exceptional cash flows. FCF is calculated as the cash flow in the year before the following items: strategic capital expenditure, equity dividends paid, expenditure on share buyback, acquisition spend, proceeds received on disposal, exceptional costs paid, loans/equity invested in joint ventures and foreign exchange movements. These metrics are used to monitor the cash conversion performance of the Group and Business Units and identify available cash for strategic investment. OCF conversion, which is OCF as a percentage of EBITDA is a key element of Executive Director and senior management remuneration. OCF and FCF results for the Group are outlined below.

OCF was €355.3 million in the year (2021: €334.2 million) and represents a strong cash conversion on EBITDA of 85.7% (2021: 100.2%). The OCF conversion target for the year was 80%. The rate remains above target conversion levels, reducing since the prior year as a result of an increased investment in working capital due to higher pricing in receivables and inventory, and the restoration of appropriate inventory buffer levels to ensure appropriate supplies of raw materials to mitigate further inflationary exposures. 

FCF was €268.6 million versus €303.9 million in 2021, with the reduction primarily due to higher net tax payments in the year combined with a reduction in dividend income from joint ventures following the disposal of the Group's interest in Glanbia Ireland.

Capital allocated for the benefit of shareholders includes regular dividend payments of €84.4 million (2021: €80.5 million) and the execution of share buyback programmes of €173.5 million (2021: €91.3 million). The Board continues to review buyback programmes as part of the Group's capital allocation strategy as they provide an opportunity to allocate capital to the benefit of shareholders. 

Acquisition spend primarily relates to the acquisition of Sterling Technology, a US based bioactive ingredient company, for an initial consideration of €54.5 million which concluded in March 2022 and divestment proceeds relate to the completion of the disposal of the Group's 40% holding in Glanbia Ireland for a consideration of €307.0 million in April 2022.

Loans to/equity in joint ventures during 2022 includes the continued investment in Glanbia Cheese EU, the mozzarella cheese joint venture in Portlaoise, Ireland which was fully commissioned during Q4, 2022. Negotiations are ongoing to sell the Group's interest in this joint venture, with full repayment of outstanding loans on completion of the sales transaction.

Group financing

The Group's financial position continues to be strong. At year end 2022, net debt was €459.4 million (2021: €602.7 million), a decrease of €143.3 million from prior year and the Group had committed debt facilities of €1.215 billion (2021: €1.16 billion) with a weighted average maturity of 5.8 years (2021: 3.9 years). Glanbia's ability to generate cash, as well as its available debt facilities ensures the Group has considerable capacity to finance future investments. Net debt to adjusted EBITDA was 1.12 times (2021: 1.71 times) and interest cover was 17.0 times (2021: 15.1 times), both metrics remaining well within financing covenants.

In December 2022, the Group completed the refinancing of €0.9 billion of bank facilities, repayable in January 2024, with replacement facilities repayable in December 2027. This refinancing improved the weighted average maturity of committed debt facilities, at 2022 year end, to 5.8 years (2021: 3.9 years).

Use of capital

Capital expenditure

The cash outflow relating to capital expenditure for the year amounted to €68.9 million (2021: €77.5 million) including €19.4 million of business-sustaining capital expenditure and €49.5 million of strategic capital expenditure. Key strategic projects completed in 2022 include ongoing capacity enhancement and business integrations to drive further efficiencies in operations.

Investments in Joint Ventures

During 2022, the Group continued developing its joint venture investment portfolio. Following the successful commissioning of the US cheese and whey manufacturing facility in Michigan in 2021, the Glanbia Cheese EU mozzarella cheese plant in Ireland was fully commissioned during Q4, 2022. A further €47.0 million was advanced to this venture in the period, all of which will be fully repaid on completion of the planned divestment of the business in 2023.

Return on Capital Employed (ROCE)

Return on Capital Employed (ROCE) increased in 2022 by 100 basis points to 11.1%. This increase was primarily due to the continued growth in profitability of the wholly-owned business, as well as the successful execution of strategy through pricing and efficiency improvements to mitigate the impact of unprecedented input cost inflation. Acquisitions remain a key part of the growth strategy of the Group with investments assessed against a target benchmark of 12% return after tax by the end of year three.

Dividends

The Board is recommending a final dividend of 19.28 cent per share which brings the total dividend for the year to 32.21 cent per share, a 10% increase over 2021. This total dividend represents a return of €87.9 million to shareholders from 2022 earnings and a payout ratio of 31% of 2022 adjusted Earnings Per Share which is in line with the Board's target dividend payout ratio of 25% to 35%. The final dividend will be paid on 5 May 2023 to shareholders on the share register on 24 March 2023.

Total Shareholder Return

Total Shareholder Return (TSR) for 2022 was -8.4%. The STOXX Europe 600 Food & Beverage Index (F&B Index), a benchmark for the Group, decreased by 14.25% in 2022. The three-year period 2020 to 2022 Glanbia TSR was +15.6% versus the F&B Index which decreased by 3.62%. The five-year Glanbia TSR to 2022 was negative 19.2% versus the F&B Index of +10.79%. Glanbia's share price at the end of the financial year was €11.92 compared to €12.30 at the 2021 year end, representing a decrease of 3%.

Impact of new accounting standards

No new accounting standards were adopted in 2022. Amendments to existing standards during the year did not have a material impact on the Group.

Pension

The Group's net pension liability under IAS 19 (revised) 'Employee Benefits', before deferred tax, improved by €15.8 million since 2021, resulting in a net pension asset of €1.6 million at 31 December 2022 (2021: liability of €14.2 million). The defined benefit pension position is calculated by discounting the estimated future cash outflows using appropriate corporate bond rates. During 2022, the company progressed the restructuring of UK pension schemes, further reducing the Group's exposure to liabilities on these legacy schemes. It is anticipated that the UK schemes will ultimately be wound up in 2023, removing any related scheme assets and liabilities and associated volatility from the Group's balance sheet.

Foreign exchange

Glanbia generates the majority of its earnings in US dollar currency and has significant assets and liabilities denominated in US dollars. As a result, and as Glanbia's reporting currency is euro, there can be a significant impact to reported numbers arising from currency movements year-on-year and on translation of US dollar non-monetary assets and liabilities in the preparation of the Consolidated Financial Statements. Commentary is provided on a constant currency basis to provide a better reflection of the underlying operating results in the year, removing the translational currency impact. To arrive at the constant currency change, the average foreign exchange rate for the current period is applied to the relevant reported result from the same period in the prior year. At the balance sheet date, due to the strengthening of the US dollar in 2022, there was a currency translation gain arising primarily on the translation of US assets and liabilities into euro which is presented within other comprehensive income and amounted to €79.9 million in the year. The amount included a gain of €0.2 million on the retranslation of non-euro denominated cash and cash equivalents as presented in the cash flow statement. Average and year end euro to US dollar rates were as follows:

Investor relations

Glanbia has a proactive approach to shareholder engagement with the Annual General Meeting (AGM) being a key event annually. In 2022, a hybrid AGM was held, with shareholders given the opportunity to attend the event in person or participate online. All details relating to the AGM were published on the Company's website: www.glanbia.com/agm.

The Group Chairman consulted directly with a number of shareholders during the year. A shareholder perceptions survey was also completed by an independent third party, where shareholders and investors were given the opportunity to provide confidential feedback to the company. Feedback was discussed with the Board with actions taken on specific areas. The Group Secretary and Head of Investor Relations also undertook a shareholder consultation on the Group's share buyback resolution and support was noted.

In 2022, Glanbia attended 12 international equities investor conferences (physically and virtually). In November 2022, the Group held a Capital Markets Day at its GPN facilities in Illinois, USA, bringing together our investor and shareholder communities to learn more about our strategy, including details of our medium term financial objectives.

In addition to full year and half year results, Glanbia publishes interim management statements after the first and third quarters to provide investors with a regular update on performance and expectations throughout the year. All releases, reports and presentations are made available immediately on publication on the Group's investor relations website.

Principal Risks and Uncertainties

The Board of Glanbia plc has the ultimate responsibility for the Group's systems of risk management and internal control. The Directors of Glanbia have carried out a robust assessment of the Group's principal risks, including those that may threaten Glanbia's business model, future performance, solvency or liquidity. The risk categorisation recognises the external risks associated with the operating environment, which are typically considered and managed through strategic processes, and the mainly internal risks associated with people, processes and systems which are managed through Glanbia's internal controls. Emerging risks with the potential to impact longer term success are also considered to ensure appropriate plans are in place to respond to them over time.

The Group's principal risks and uncertainties are summarised in the risk profile table below. No new principal risks were identified during the year while some fluctuation in the risk trends did arise including:

· The market disruption risk trend has increased from stable to increasing during the year due to the potential impacts to demand from the rising cost of living which has been intensified by continued inflationary pressures and rising energy costs hitting household incomes.

· Economic, industry and political, climate change, supply chain, talent management, and cyber security and data protection risks continue to trend upwards.

· The importance of climate change risk on the Groups strategy continues to increase with a significant and continued effort being applied at a Group and business segment level in this area to address the evolving regulatory landscape and increasing stakeholder expectations.

· While pandemic related risks have reduced due to the success of vaccination rollout programmes, the supply chain risk trend remains elevated with continued inflationary headwinds across the business driven by geo-political conflict and increased global activity.

There may be other risks and uncertainties that are not yet considered material or not yet known to Glanbia and this list will change if these risks assume greater importance in the future. Likewise, some of the current risks will drop off the key risks schedule as management actions are implemented or changes in the operating environment occur.

Key risk factors and uncertainties with the potential to impact on the Group's financial performance in 2023 include:

· Economic, industry and political risk - continues to increase primarily due to the inflationary pressures across the global economy and the geo-political risks associated with the conflict between Russia and the Ukraine.

· Market disruption risk - adverse changes in economic conditions and/or continued inflationary and interest rate pressures could result in reduced consumer spending which may disrupt demand. The inability to contain the spread of global pandemics, such as Covid-19, may also disrupt markets in 2023.

· Supply chain risk - Glanbia is actively monitoring a number of supply chain and inflationary pressures including:

o  The overall impact on margins of movements in dairy pricing, particularly in whey markets. This has resulted in price increases to offset some of the increased input costs and further increases may be required in 2023 which may disrupt demand due to price elasticity. Any further price increases will be managed against the Group's ambition to continue to drive revenue growth;

o  The ability of governments and medical agencies to suppress the spread of global pandemics, such as the Covid-19 virus. This is important in preventing unexpected supply chain disruptions which could result in restrictions on the importation of key raw materials and/or negative impacts on the Group's international sales channels. The Group is holding appropriate safety stocks for core raw materials, however a prolonged impact to supply chains due to a pandemic or the geo-political environment in key trading regions would have negative consequences from both a supply and pricing perspective;

o  Labour markets continue to be competitive, particularly in the US, and plants are operating at a high capacity. Labour inflation, together with global supply chain cost increases in transport and logistics will continue to require careful navigated in 2023;

· Customer concentration risk - while strategically the Group aims to build strong customer relationships with major customers, material disruption with, or loss of, one or more of these customers, or a significant deterioration in commercial terms, could materially impact profitability. This risk can also expose the Group to credit exposure and other balance sheet risks. The Board is focused on utilising available mitigation to limit such exposures where possible; and

· Health and safety risk - a failure to maintain good health and safety practices or the risk of a global pandemic, such as Covid-19, in Glanbia's core markets, may adversely impact performance. A wide range of additional measures and mitigations have been introduced as a result of the Covid-19 pandemic which build on the existing strong controls across the Group.

The Group actively manages these and all other risks through its risk management and internal control processes.

Cautionary statement

This announcement contains forward-looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The Directors undertake no obligation to update any forward-looking statements contained in this announcement, whether as a result of new information, future events, or otherwise.

On behalf of the Board

Siobhán Talbot Mark Garvey

Group Managing Director Group Finance Director

28 February 2023

Annual General Meeting (AGM)

Glanbia plc's AGM will be held on Thursday 4 May 2023, in the Lyrath Estate Hotel, Kilkenny, Ireland.

Results webcast and dial-in details:

There will be a webcast and presentation to accompany this results announcement at 8.30 a.m. GMT today. Please access the webcast from the Glanbia website at https://www.glanbia.com/investors/results-centre, where the presentation can also be viewed or downloaded. In addition, a dial-in facility is available using the following numbers:

The access code for all participants is: 469953

A replay of the call will be available for 30 days approximately two hours after the call ends.

For further information contact

Glanbia plc +353 56 777 2200

Group income statement

for the financial year ended 31 December 2022

Group statement of comprehensive income

for the financial year ended 31 December 2022

Group balance sheet

as at 31 December 2022

Group statement of changes in equity

for the financial year ended 31 December 2022

Group statement of cash flows

for the financial year ended 31 December 2022

* €12.2 million in 2021 related to discontinued operations and represented the net cash inflow from investing activities from discontinued operations.

Notes to the financial statements

for the financial year ended 31 December 2022

1. Accounting policies

The financial information set out in this document does not constitute full statutory financial statements but has been derived from the Group financial statements for the year ended 31 December 2022 (referred to as the 2022 financial statements). The Group financial statements have been prepared in accordance with EU adopted International Financial Reporting Standards ("IFRS"), IFRIC interpretations and those parts of the Companies Act 2014, applicable to companies reporting under IFRS. The 2022 financial statements have been audited and have received an unqualified audit report. Amounts are stated in euro millions (€'m) unless otherwise stated. These financial statements are prepared for the 52‐week period ended 31 December 2022. Comparatives are for the 52‐week period ended 1 January 2022. The balance sheets for 2022 and 2021 have been drawn up as at 31 December 2022 and 1 January 2022 respectively.

The financial statements have been prepared under the historical cost convention as modified by use of fair values for certain other financial assets, contingent consideration, put option liability, and derivative financial instruments.

All notes to the financial statements include amounts for continuing operations, unless indicated otherwise.

The Group's accounting policies which will be included in the 2022 financial statements are consistent with those as set out in the 2021 financial statements.

There are no new IFRS standards or amendments effective for the Group in 2022 which had a material impact on the financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 28 February 2023 and signed on its behalf by D Gaynor, S Talbot, and M Garvey.

Going concern

After making appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the financial statements. The Group therefore considers it appropriate to adopt the going concern basis in preparing its financial statements.

Adoption of amended standards

The following changes to IFRS became effective for the Group during the financial year but did not result in material changes to the Group's financial statements:

• Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16

• Onerous Contracts - Cost of Fulfilling a Contract - Amendments to IAS 37

• Annual Improvements to IFRS Standards 2018-2020

• Reference to the Conceptual Framework - Amendments to IFRS 3

New and amended standards that are not yet effective

The Group has not applied new standards and amendments to existing standards that have been issued but are not yet effective. The most significant of which are as follows:

Disclosure of Accounting Policies - Amendments to IAS 1 (EU effective date: on or after 1 January 2023)

The IASB amended IAS 1 to require entities to disclose their material rather than their significant accounting policies. The amendments define what is 'material accounting policy information' and explain how to identify when accounting policy information is material. They further clarify that immaterial accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material accounting information. The Group does not expect the adoption of the amendments to have a material impact on the financial statements.

Classification of Liabilities as Current or Non-current - Amendments to IAS 1 (IASB effective date: on or after 1 January 2024)

The amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date (e.g. the receipt of a waiver or a breach of covenant). The amendments also clarify what IAS 1 means when it refers to the 'settlement' of a liability. The Group is currently evaluating the impact of the amendments on future periods.

Other changes to IFRS have been issued but are not yet effective for the Group. However, they are either not expected to have a material impact on the Group or they are not currently relevant for the Group.

2. Segment information

In accordance with IFRS 8 'Operating Segments', the Group has identified Glanbia Performance Nutrition and Glanbia Nutritionals as reportable segments as at 31 December 2022. Glanbia Performance Nutrition manufactures and sells sports nutrition and lifestyle nutrition products through a variety of channels including specialty retail, online, Food, Drug, Mass, Club (FDMC), and gyms in a variety of formats, including powders, Ready-to-Eat (bars and snacking foods) and Ready-to-Drink beverages. Glanbia Nutritionals manufactures and sells cheese, dairy and non-dairy nutritional and functional ingredients, and vitamin and mineral premixes targeting the increased market focus on health and nutrition.

Glanbia Ireland is no longer reported as a segment following its disposal on 1 April 2022 (note 13). In accordance with IFRS 8 Operating Segments, the prior period pre-exceptional segment results were restated to exclude Glanbia Ireland and the segment assets associated with Glanbia Ireland are included within "All other segments and unallocated" for the comparative period.

All other segments and unallocated include both the results of joint ventures who manufacture and sell cheese and dairy ingredients and unallocated corporate costs. These investees did not meet the quantitative thresholds for reportable segments in 2022 or 2021. Amounts stated for joint ventures represents the Group's share.

These segments align with the Group's internal financial reporting system and the way in which the CODM assesses performance and allocates the Group's resources. Each segment is reviewed in its totality by the CODM. The CODM assesses the trading performance of operating segments based on a measure of earnings before interest, tax, amortisation and exceptional items. Given that net finance costs and income tax are managed on a centralised basis, these items are not allocated between operating segments for the purposes of the information presented to the CODM and are accordingly omitted from the detailed segmental analysis below.

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties. Revenue of approximately €1,076.3 million (2021: €736.3 million) and €829.4 million (2021: €543.3 million) is derived from two external customers respectively within the Glanbia Nutritionals segment.

Pre-exceptional segment operating profit before intangible asset amortisation and impairment (EBITA) is reconciled to reported profit before tax and profit after tax in the Group income statement.

Geographical information

Revenue from external customers, and non-current assets, other than financial instruments, deferred tax assets, and retirement benefit assets attributable to the country of domicile and all foreign countries of operation for which revenue/non-current assets exceed 10% of total Group revenue/non-current assets are set out on the following page.

Revenue from external customers in the table below and in the disaggregation of revenue by primary geographical markets table below is allocated to geographical areas based on the place of delivery or collection of the products sold as agreed with customers as opposed to the end use market where the product may be consumed.

Disaggregation of revenue

Revenue is disaggregated based on the Group's internal reporting structures, the primary geographical markets in which the Group operates, the timing of revenue recognition, and channel mix as set out in the following tables.