Glanbia issues Q1 financial statement
For Q1, the company said its wholly owned revenue from continuing operations increased 4.8%, constant currency.
Revenue decreased 8.1% when compared to the same period in 2017 on a reported basis, which Glanbia said was due to the weaker US dollar to euro exchange rate.
The key driver of revenue increase was volume growth from both Glanbia Performance Nutrition (GPN) and Glanbia Nutritionals (GN), which was 7.2%. Acquisitions contributed 3.6% growth in revenue.
Pricing declined by 6.0% year on year, driven by relatively weaker dairy markets and brand investment in Glanbia Performance Nutrition.
Glanbia Performance Nutrition
GPN revenue increased by 9.3%, driven by volume growth of 5.5%, the Body & Fit acquisition delivering 7.8%, offset by a price decline of 4.0%.
GPN delivered volume growth in both the US and other international markets. In the US, this was broad based across key channels. The Body & Fit direct to consumer brand, acquired in the first quarter of 2017, performed well, and Glanbia is investing in this business to accelerate growth as well as build overall digital capability for GPN.
GPN will continue to invest behind innovation and its brands and expects EBITA margins for the full year to be broadly in line with 2017 as these investments will be funded by lower input costs, which will crystallize in the second half of the year.
GN delivered revenue growth in line with expectations in the first three months of 2018. Revenues increased by 1.1% versus prior year. This was driven by a volume increase of 8.6%, offset by a price decline of 7.5%.
Nutritional Solutions revenue declined by 3.6% in the period, driven by volume growth of 2.6%, which was across dairy and non-dairy ingredients, offset by a price decline of 6.2%, which was related to relatively lower year on year dairy prices.
US Cheese revenue increased by 5.0% in the period, driven by volume growth of 13.7% due to the timing of customer off-takes versus the prior year. Pricing declined by 8.7% as a result of reduced cheese markets year on year.
Revenues from JVs increased by 29.7% in the first three months of 2018.
The transaction to create Glanbia Ireland delivered 34.8% revenue growth, volume growth was 4.3% and this was offset by a price decline of 9.4% as a result of comparatively lower year on year dairy markets. As a result, the outlook for JVs is for earnings to be reduced in 2018 versus prior year particularly in the first half of the year.
The project to expand production capacity by 25% at the Southwest Cheese facility in the US is nearing completion with commissioning expected to be concluded in Q2, 2018.
Glanbia's net debt at March 31, 2018 was €385m ($470m), a decrease of €350m ($427m) versus the net debt position at the end of Q1 2017. This improvement has been primarily driven by the receipt of proceeds from disposals made in 2017.
Glanbia said it expects to deliver more than 80% operating cash conversion of EBITDA in 2018. Total 2018 capital expenditure is expected to be approximately €75m-€85m ($91m-$104m).
Full year outlook
Glanbia reiterated its guidance that on a pro-forma basis, adjusted earnings per share are expected to grow between 5%-8% constant currency for full year 2018. Earnings growth is expected to be delivered in the second half of 2018.
Comparative dairy market pricing and planned investments will deliver a reduced performance in the first half of the year.
The company also warned that if the average euro-US dollar foreign exchange rate for the full year remains at similar levels to the average rate for the first quarter of 2018, Glanbia expects an approximate 8% translational headwind to full year reported results.