Glanbia reports double-digit decline in profit as restrictions hit protein sales

Irish food group Glanbia has reported a double-digit decline in profitability, with sales of its performance nutrition products hit by Covid-related restrictions.

The Kilkenny-based company said its performance nutrition unit, which sells protein powders to gym-goers and dieters, felt the impact of Covid-19 curbs “which caused significant disruption to international markets and the North American speciality and distributor channels.”

However it said it expected pandemic-related restrictions to ease in key regions during the course of 2021, assuming the widespread rollout of vaccines, while noting “ the duration and impact of the pandemic remains volatile”.

Glanbia said headline revenue declined by 1.4 per cent to €3.8 billion in 2020, which was described as a strong performance in the circumstances.

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Managing director Siobhán Talbot said while “Covid hit us a curve ball” the underlying health of the business remained strong .

This was reflected in the resumption of an earnings guidance for the year ahead, she said.

The company expects adjusted EPS (earnings per share) to increase by 6-12 per cent in 2021 as the the disruptive impact of Covid-19 abates. Glanbia last year cancelled its earnings forecast in the face of the Covid uncertainty.

Prior to the pandemic, the company had reported problems with its performance nutrition business, which is spearhead by its Optimum Nutrition and Slimfast brands, related to tariffs, slowing growth in several markets and supply chain issues.

Ms Talbot said the problems that beset the business in 2019 had largely been corrected and that she expected its performance nutrition division to drive growth this year.

Glanbia has roughly a 12 per cent share of the global market for performance nutrition products and is the biggest seller of these products on Amazon.

Ms Talbot said the company had overhauled its performance nutrition business, which accounted for €1.1 billion of revenue last year, simplifying its product offering and beefing up its eCommerce platform.

She said Optimum Nutrition, when Glanbia bought it in 2008, was a speciality stores business but this has changed with most of the sales now either online or through other mass channels.

Acquisitions

Ms Talbot also hinted that investors could expect acquisitions in the near future with the company now actively looking at businesses to complement it existing suite.

In its report, Glanbia said its board is recommending a final dividend of 15.94 cent per share which brings the total dividend for the year to 26.62 cent per share, in line with the previous year.

Revenue from the group’s nutritional business - Glanbia Nutritionals (GN)- was up 10 per cent in 2020, but Glanbia Performance Nutrition (GPN), hit by Covid-19 restrictions, saw like-for-like revenue decline of 13.3 per cent.

Nonetheless the company said it remained in a strong financial position with net debt reduced by €120 million to €494 million.

“We anticipate that 2021 will see consumers continue to focus on health and wellbeing: prioritising functional nutrition including immunity enhancing products; maintaining a healthy weight; and supplementing protein-rich foods to support performance and healthy lifestyle goals,” Ms Talbot said.

“This positions Glanbia very well for the future given our core focus on nutrition, health and wellbeing,” she said.