Glanbia plc: From an Irish dairy producer to a global nutrition giant

written on December 7, 2021

Based in 34 countries and with its products sold in approximately 130, Glanbia is a global nutrition group extraordinaire, having evolved from its original roots in Irish dairy farming to a global dairy giant. With the drive to transform and perform fuelling this evolution, its journey to the top has seen it expand its footprint across continents, while it has ventured into new markets, fostering strategic partnerships and investing in ambitious technology and plants along the way.

Boasting a portfolio of market-leading brands, a successful track record and a business model that drives and encourages the company to innovate, grow and prosper, Glanbia has managed to weather the disruptions caused by the Covid-19 pandemic, delivering a resilient performance throughout 2020 and so far in 2021. And with the ability to capitalise on the all-important health and wellness trends that underpin its strategy, Glanbia is gaining even more traction.

A brief history of Glanbia

For decades dairy products have been key drivers of growth for Ireland’s agricultural sector, so much so that in the early 19th century, the country was amongst the world’s largest producers of dairy products. As new technologies were introduced in the country, Ireland’s dairy sector saw small independent farmers joining forces to form a group and building centralised dairy processing facilities, which went on to be known as creameries. In 1964, the Waterford Co-operative Society was formed, bringing together several small Irish creameries into co-operative societies, which could now produce a bigger range of products.

As Waterford continued to grow throughout the 1970s, 25 other cooperatives agreed to merge and establish the Avonmore Creameries Federation. With both businesses following a similar path, the two eventually merged in 1997 to form Avonmore Waterford Group plc. and two years later, the company was rebranded, changing its name to Glanbia. Following the merger, it underwent a reorganisation process, while it reshaped its portfolio. In the meantime, it had become the fourth largest dairy processor in Europe and the fourth largest cheese producer in the world.

Much of Glanbia’s evolution along the decades has been through acquisitions which have played a key role to the company’s success. In the decade after its IPO, Avonmore made multiple acquisitions across Ireland, the UK, Europe, as well as the U.S., whereas Waterford purchased several dairy companies both in the UK and U.S. More recently, some of Glanbia's most noteworthy acquisitions have included its flagship sports nutrition brand, Optimum Nutrition, which took place in 2008, while the company branched out into the lifestyle nutrition by welcoming thinkThin, followed by Amazing Grass and SlimFast. Other, acquisitions have included Watson and Foodarom, both of which have enhanced its nutrition solutions and flavour capabilities.

Today, Glanbia is mainly focused on its two core businesses, namely its dairy-based milk products and its Glanbia Nutritionals division. Glanbia Performance Nutrition segment includes performance nutrition products, which are sold through a range of channels, particularly specialty retail, online and through gyms in a range of formats that include powders, as well as ready-to-drink beverages. On the other hand, its Nutritionals segment provides nutritional solutions through manufacturing and selling of items like cheese, dairy and non-dairy nutritional ingredients and vitamins, as well as mineral premixes with a market focus on health and nutrition.

Fun fact

In 1999, an Extraordinary General Meeting and a Special General Meeting took place to introduce a new name. After much deliberation, Avonmore Waterford Group was re-christened to Glanbia on March 4, 1999. The name stems from the Galeic language which means ‘pure food’.

When did Glanbia go public?

Both Avonmore and Waterford went public in the 1980s, with the former on September 6, 1988, while Waterford Foods plc was launched on the Irish Stock Exchange (ISEQ) a month later, on October 6, 1988.

Glanbia has historically declared a dividend twice yearly and the COVID-19 pandemic hasn’t deterred it from doing so. Indeed, an interim dividend of 10.68 cents per share was paid on October 2, 2020, while a final dividend of 15.94 cents per share was paid on May 7, 2021.

More notably, in August 2021, the global nutrition group announced a new share buyback programme of up to €50 million, while it upped its interim dividend for shareholders after recording a stronger than expected first-half performance.

Is Glanbia stock a buy?

Despite the global disruption caused by COVID-19, the company managed to navigate the uncertainties of the pandemic well, with its business portfolio delivering a resilient performance in 2020. Revenue for the year came in at €1.9 billion, with profit after tax of €61 million, whereas some €1.14 billion of revenue was generated through its Global Performance Nutrition segment. According to the company, much of this resilience was down to strong growth across its digital platform, swift recovery in ingredient dairy commodities pricing and the speed at which the company acted to protect not only its staff, but also its milk suppliers, hauliers, as well as customers.

As for 2021 first half performance, this has proven to be quite notable as it beat forecasts after recording an 11.2% rise in revenues to €2.04 billion on a reported basis. This compares to the €1.84 billion for the same six months a year earlier. At the same time, the pandemic boosted existing consumer trends for health and wellness and the company was well placed to capitalise on this. As a result, its performance nutrition unit, which sells products, such as protein powders, many of which under its best-selling Optimum Nutrition brand, saw revenue increase by almost 20% to €638 million. Wholly-owned revenue was €2,042.2 million, an increase of 20.3% constant currency,

And Glanbia appears to be big in the performance nutrition sector, occupying 12% to 13% of the global market for performance nutrition products, while it is one of the biggest sellers of these on Amazon (AMZN). As for the other side of its business, nutritionals, Glanbia reported a 7.6% rise in turnover to €1.4 billion for the half year. Meanwhile, it generated over €160 million of operating cash flow and reduced net debt by more than €100 million. What’s more, thanks to its strong first-half performance, there was a significant improvement in its profit, with EPS (adjusted earnings per share) of 52.86 cents in the period, marking a 70.2% increase.

What’s next for Glanbia?

As the company is growing and evolving to fit with current consumer trends, Glanbia is planning to exit the dairy sector to focus on growing its core ingredients and nutrition divisions after agreeing a deal to sell its 40% stake in Ireland’s biggest milk processor. Should the move go ahead, it will effectively end the Kilkenny-based food company’s involvement in dairy processing in the country - once its core business - and cement instead its focus on food ingredients and sports nutrition.

A huge market that has seen a lot of growth over the past few years, in 2019 total global retail sales in the sports nutrition market amounted to $21.6 billion, up from the $15.1 billion recorded in 2015 according to Euromonitor. Meanwhile the market size was valued at $10.7 billion in 2020 and is expected to expand at a CAGR (compound annual growth rate) of 10.9% from 2021 to 2028 as the number of consumers focused on self-care and preventive medication and fitness is on the rise.

A leading global nutritional company with a strong underlying demand for its health and wellness-focused portfolio of products, Glanbia is set to continue being well positioned for the months ahead.

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