Over the period, wholly owned revenue increased 8.4%, constant currency. On a reported basis, reflecting the stronger US Dollar Euro foreign exchange rate, revenue increased 16.2% when compared to the same period in 2018. The drivers of revenue increase on a constant currency basis were volume growth of 1.4%, acquisitions of 9.7% offset by a price decline of 2.7%.
In February 2019, Glanbia completed the acquisition of Watson LLC and Polymer Films LLC for $89m in cash. Watson is a US based non-dairy ingredient solutions business and is now part of the Nutritional Solutions business within Glanbia Nutritionals. The transaction was fully financed by Glanbia’s existing banking facilities and it is expected to be marginally accretive to earnings per share in 2019.
Glanbia Performance Nutrition
On a constant currency basis, Glanbia Performance Nutrition (GPN) delivered revenue growth in the first three months of 2019. Compared to the prior year, revenue increased by 4.9% and this was driven by the SlimFast acquisition delivering 24.8% offset by a volume decline of 16.5% and a price decline of 3.4%.
The SlimFast acquisition is performing strongly with the integration of the business continuing as planned, Glanbia said. Growth was driven by the core range and particularly strong consumer demand for recent innovations in the UK and US, in particular the Keto range.
Volume decline in the first quarter reflects the seasonality in the business following a strong Q4 2018 and specific supply chain initiatives in the period that impacted the phasing of sales in certain non-US markets. Price decline reflects a continuation of brand investment and pricing initiatives to negate the impact at consumer level of FX and tariff headwinds.
Glanbia said the full year 2019 outlook for GPN is good, with consumption growth trends expected to remain positive for the remainder of the year and this is expected to drive growth over the full year. Price increases will be implemented in the second half of the year and full-year revenue growth is expected to be driven by a mix of volume and price increases.
Glanbia Nutritionals delivered revenue growth in the first three months of 2019. Revenue increased by 10.4% versus prior year, driven by a volume increase of 11.2%, offset by a price decline of 2.4% and the Watson acquisition delivering 1.6%. Revenue reporting in Glanbia Nutritionals recognizes 100% of the sales from the Southwest Cheese (SwC) Joint Venture with comparisons to prior year on the same basis.
Nutritional Solutions (NS)
NS is a provider of customized nutrient premixes, protein solutions, functional beverages and flavors.
NS revenue increased by 22.1% in the period, driven by volume growth of 16.1%, a price increase of 0.7% and the Watson acquisition delivering 5.3%.
Volume growth was driven by value-added dairy solutions against a relatively weak first quarter in 2018. Non-dairy solutions also performed well with good volume growth in the Asian region, Glanbia said. Price increase was primarily driven by an improved mix in dairy solutions.
US Cheese is a producer and marketer of American-style cheddar cheese in the US supplying brand owners and private label companies who in turn supply major retail and food service operators. US Cheese operates all of the dairy processing plants within GN and also the SwC JV plant, which produces cheese and whey ingredients.
US Cheese revenue increased by 5.5% in the period, through volume growth of 9.1% primarily due to capacity expansion in the SwC JV plant completed in the prior year. Pricing decreased by 3.6% as a result of lower cheese markets year on year.
Glanbia said the full year 2019 outlook for GN is good with positive momentum continuing across the NS business driven by strong underlying volume growth and expected positive pricing.
Revenues from Joint Ventures increased by 14.9% in the first three months of 2019. This was driven by volume growth of 13.6%, mainly from Glanbia Ireland and the SwC JV, and a price increase of 1.3% as a result of improved year-on-year dairy markets.
Glanbia's net debt at March 30, 2019 was €809.8m ($902.8m), an increase of €424.7m ($473.5m) versus the net debt position at the end of the first quarter of 2018. This increase has been primarily driven by the acquisitions of Watson and SlimFast.
Full year outlook
Glanbia reiterated its guidance that adjusted earnings per share is expected to grow between 5% - 8% constant currency for full year 2019. 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 2019, Glanbia said it expects the full year 2019 reported result to be 3% higher than the constant currency outlook.