Glanbia : 2022 Half Year Results

Glanbia plc 2022 Half Year

Half year results for the six month period ended 2 July 2022

Delivering better nutrition for every step of life's journey

17 August 2022

1

Glanbia half year 2022 results

Good first half momentum, full year outlook upgraded to 9% to 13% growth in adjusted EPS constant currency

17 August 2022 - Glanbia plc ("Glanbia", the "Group", the "Company", the "plc"), the global nutrition company, is publishing its financial results for the six month period ended 2 July 2022 ("half year 2022", or "HY 2022").

Half year highlights include:

• Group revenues of €2.8 billion (HY 2021: €2 billion) represents growth of 26.8% constant currency (up 38.5% reported);
• Strong operating performance

1. Glanbia Performance Nutrition ("GPN") branded like-for-like volume +1.9%, pricing +13.9%

• 1. Nutritional Solutions ("NS") like-for-like volume +1.6%, pricing +17.9%;
• Group EBITA pre-exceptional €171.7m (HY 2021: €159.9m), a decrease of 3.5% constant currency (up 7.4% reported);
• Adjusted earnings per share1 ("EPS") ahead of expectations at 52.31 cent (HY 2021: 48.84 cent), a decrease of 3.8% constant currency (up 7.1% reported);
• Basic EPS of 66.13 cent (HY 2021: 27.90 cent);
• Net debt to adjusted EBITDA ratio of 1.83 times (HY 2021: 1.51 times);
• Completed the disposal of 40% interest in Glanbia Ireland and acquired Sterling Technology, a US bioactive ingredient company;
• Continued progress against ESG targets and Board diversity increased;
• Returned €127.1m to shareholders in the period via share buybacks;
• Interim dividend increased by 10% to 12.93 cent per share; and
• Strong H2 EBITA growth expected over prior year - full year guidance upgraded to 9% to 13% adjusted EPS constant currency growth (21% to 25% reported2)

Commenting today Siobhán Talbot, Group Managing Director, said:

"I am pleased to report that half year 2022 results have exceeded our plans, demonstrating the impact of a series of actions implemented since the latter part of last year in response to unprecedented inflation.

Revenues grew strongly with significant pricing initiatives and volume growth in all business segments in the period. Adjusted EPS1 at 52.31 cent, reflected improving momentum across the Group, building on a strong 2021 comparator. We continue to make progress on our strategic agenda and with the completion of the sale of the Company's minority interest in Glanbia Ireland, Glanbia plc continues to evolve as a focused, purpose led global nutrition company.

We will continue to monitor inflationary trends into the second half of the year but are confident that further pricing action and operational efficiencies will deliver improving margins and strong year-on-year EBITA growth.

Current expectations for improved EBITA growth in GPN underpin the upgrade in full year guidance for the Group, with growth in adjusted EPS1 now expected to be 9% to 13%, constant currency. Based on current foreign exchange rates, the reported adjusted EPS growth is expected to be 21% to 25%."

1. Adjusted earnings per share ("EPS") for continuing operations
2. Based on foreign exchange rates being sustained for the reminder of 2022

2

Summary financials (pre-exceptional)1

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 43.
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 HY 2022 was €1 = $1.093 (HY 2021: €1 = $1.204). 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. Adjusted earnings per share includes the contribution of continuing and discontinued operations.

2022 financial half year results summary

2022 half year overview

The Group's results for the first half of 2022 were very solid in the context of unprecedented inflationary trends across the business. Significant management actions were taken to mitigate cost inflation including price increases and other efficiency measures. Consumer response to date to higher pricing has been

3

better than expected in key areas with volume growth in both GPN and GN for the half year. EBITA margins in the period reduced as actions to mitigate inflation did not fully insulate year-on-year margins which, particularly in GPN, were comparatively high in the first half of 2021.

Glanbia wholly-owned revenue was €2,828.8 million, an increase of 26.8% constant currency (up 38.5% reported). GPN revenues grew by 14.9% constant currency (up 24.4% reported) on prior year driven by a 0.5% increase in volumes, favourable pricing of 13.6% and the positive impact of acquisitions of 0.8%. GPN had good volume and consumption growth in performance nutrition, healthy lifestyle and direct-to-consumer ("D2C") brands which was offset by continuing headwinds in the diet category and the SlimFast brand. Pricing was positive across all GPN brands. GN revenues were up 32.2% constant currency (up 44.9% reported) on prior period driven by volume increase of 5.1%, price increases of 25.4%, and the positive impact of the PacMoore and Sterling Technology acquisitions of 1.7%. GN volume growth was largely driven by growth in the Nutritional Solutions non-dairy ingredient portfolio and US Cheese.

Wholly-owned EBITA pre-exceptional was €171.7 million, down 3.5% constant currency (up 7.4% reported).

GPN pre-exceptional EBITA decreased by 18.1% constant currency (down 8.8% reported) to €82.3 million (HY 2021: €90.2 million). GPN pre-exceptional EBITA

margin at 10.4% (HY 2021: 14.1%) was 370 basis points lower than prior year as significant inflation in cost of goods sold was not fully mitigated by increased pricing and incremental benefits from the GPN transformation programme. GN pre-exceptional EBITA increased by 15.5% constant currency (up 28.3% reported) to €89.4 million (HY 2021: €69.7 million) with good growth in both NS and US Cheese. GN pre-exceptional EBITA margin at 4.4% (HY 2021: 5.0%) was 60 basis points lower than prior year largely due to the dilutive impact of higher pricing.

The Group's joint ventures (continuing operations) performed in line with expectations with profit after tax decreasing by €7.4 million to €11.4 million for the first half of 2022 due to strong prior year comparatives.

Total Group profit after tax for continuing operations (pre-exceptional items) for the period was €121.5 million, down €0.9 million on prior half year.

Adjusted EPS for continuing operations for the period of 52.31 cent represents a decline of 3.8% constant currency (up 7.1% reported) versus a strong prior year comparative.

Capital investment

Glanbia's total investment in capital expenditure (tangible and intangible assets) was €29.3 million in the first half of 2022 (HY 2021: €39.7 million). Strategic investment totalled €22.0 million related largely to IT investment supporting a global transformation of the Group's HR systems and operating model. Total capital expenditure for the year is expected to be €70 million to €80 million.

Dividend per share

The Board is recommending an interim dividend of 12.93 cent per share (HY 2021: 11.75 cent per share) representing a 10% increase on prior year interim dividend. Glanbia's overall dividend policy remains unchanged at a target annual dividend payout ratio of between 25% and 35% of adjusted EPS. The interim dividend will be paid on 7 October 2022 to shareholders on the register of members as at 26 August 2022. Irish withholding tax will be deducted at the standard rate where appropriate.

Share buyback

Glanbia maintained share buyback activity through the first half of 2022, deploying €127.1 million in the period (HY 2021: €33.4 million). Following the Company's AGM on 5 May 2022, Glanbia consulted with, and received support from, a number of its independent shareholders on the use of share buy-backs as a capital allocation tool, where appropriate. On 23 June 2022, the Group launched a further €50 million share buyback which is ongoing. In the year to date Glanbia has deployed a total of €148.0 million on share buybacks.

Board update

As part of Glanbia's focus on Board renewal, on 29 July 2022, the Company announced the appointment of two non-executive Directors to the Board effective 1 August 2022, Ms. Ilona Haaijer and Ms. Kimberly Underhill. This follows the reduction in Glanbia Co-operative Society Limited's representation on the Board from seven Directors in 2021, to five in 2022 with a further agreed reduction to three in 2023. Ms. Haaijer, a Dutch citizen, brings extensive and significant leadership experience of strategic development, change management, mergers and acquisitions and leading complex, global businesses in the food ingredients and consumer sectors. Ms. Underhill, a US citizen, brings extensive and significant leadership experience in US and international consumer products businesses, with particular strength in product development, marketing, portfolio management, brand-building, strategic planning and international business development. The Board is currently made up of 14 members, five of which are female, and in 2023 the overall size of the Board is planned to reduce to 13 Members.

ESG update

Glanbia continues to make solid progress against its stated objectives in its environmental, social and governance agenda. As referenced above, recent Board changes have increased female Board membership to 36%. Initiatives in the roadmap to decarbonise operations (Scope 1 & 2) emissions in line with the Group's Science Based Targets initiative ("SBTi") targets are advancing through technical, engineering, procurement and financial evaluation and decision making. A separate working strand on dairy supply chain (Scope 3) emissions reductions is also progressing, together with assessing priority suppliers in all categories through EcoVadis, a provider of business sustainability ratings. The Group will finalise water targets, and is completing zero waste planning for all operational sites, in 2022. Glanbia's Diversity, Equity & Inclusion ("DEI") agenda has further progressed with the launch of an inclusive leadership development programme for senior leaders as well as additional employee resource groups for LGBTQ+ and multicultural employees. DEI targets have been cascaded into leadership incentives deeper in the organisation and, to assist target delivery, Glanbia is formally measuring employee attitudes to inclusion and belonging as well as female management participation levels.

Capital Markets Event

The Group will be holding a Capital Markets event on November 9th to update the market on its growth agenda, while also providing an opportunity to meet divisional management.

Outlook

The resilience and momentum of Glanbia's core brands and nutritional solutions ingredients portfolio in HY 2022 supports the Group's confidence in its ability to navigate continuing external risks including an increasingly challenging economic environment, the impact of geopolitical tensions, and unprecedented inflation. In the absence of any further unanticipated major market disruption, Glanbia expects sustained revenue and earnings momentum in H2 2022.

4

In FY 2022, GPN expects to deliver low teens percentage revenue growth while GN NS expects strong double-digit percentage revenue growth. As previously noted, revenue growth in both platforms will be primarily driven by pricing. EBITA growth is expected to be delivered in GPN, GN NS and US Cheese based on the momentum to date and the actions taken to mitigate material inflation headwinds. Full year expectations for joint ventures are unchanged from prior views. The full year GPN EBITA margin outlook has improved with the targeted EBITA margin of 12% expected to be achieved in the fourth quarter and full year margin contraction now expected to be up to 50bps versus prior year. In GN NS, the expected full year margin contraction of c.100bps will be driven by the mathematical dilution related to significant pricing changes, particularly in dairy ingredients. From a Group perspective the strong focus on cash generation is expected to deliver an operating cash flow conversion rate of over 80% for FY 2022.

Based on these latest expectations for full year earnings growth in GPN and GN, Glanbia is now confident to upgrade full year guidance for growth in adjusted EPS to a range of 9% to 13% constant currency. Should current foreign exchange rates be sustained for the remainder of 2022 the reported adjusted EPS growth would be expected to be in a range of 21% to 25%.

Inside Information

This announcement contains inside information as set out in the paragraphs titled Outlook. The person responsible for arranging for the release of this announcement on behalf of Glanbia plc is Liam Hennigan, Group Secretary and Head of Investor Relations. The time and date of this announcement is, at 7am BST, 17 August 2022.

5