Glanbia’s FY 2013 results reflect the continued strong performance from the group, achieving 8% YoY EPS growth, in line with our forecasts and management guidance of a 6% to 5% EPS growth. The market will be encouraged by the company’s forward guidance of 8% to 10% growth on a constant currency basis to 2018. <p>
<b>Overall performance in line </b> – Revenue for the year 2.4bn was up 7.7% YoY. Revenue grew 10.3% on 30bp in JVs, mainly due to currency effects.. Adjusted EPS at 55.5cps per share was up 8% YoY and at the higher end of management guidance. <p>
<b>Strong divisional performance </b>– At a divisional level, there was revenue and EBITA growth from all divisions. As expected, Global Performance Nutrition had the best performance with revenue growth of 17% YoY, a slight deceleration from the 19% YoY recorded in the first 9 months. The growth was mainly due to volume growth as the effects of pricing were minimal. Branded products were the main driver of volume growth. Global Nutrition EBITDA grew by 28% mainly due to a 100bp expansion in EBITA margins. <p>
There was also strong growth from the US Cheese and Ingredients business. Revenue grew by 11.5% YoY to €995m, mainly due to organic volume growth of 6.2%, pricing and mix of 1.3% and the impact of acquisitions of 4%. US Cheese experienced a favourable market backdrop for cheese prices complemented by export growth. Ingredient Technologies performed largely in line YoY as strong volume growth was offset by lower prices. Premix Solutions also performed strongly. <p>
Dairy Ireland revenue were 3.4% higher YoY.Continued weakness in consumer business was offset by a strong performance from the Agri business.
<b>Outlook </b>- Glanbia is guiding for continued strong performance for FY 2014, with EPS growth of 8% to 10% on a constant currency basis. For the first time, the company is also guiding that its ambition is deliver a similar growth rate to 2018 while seeking to sustain a ROE in excess of 12%, mainly due to strong positive growth from Global Nutrition and Ingredients and from ongoing organic investment. We expect the market to take the above industry growth guidance positively.
<b>Valuation in line with peers</b> – At current levels, it trades at a FY 2014 PE of c. 20x and FY 2014 EV/EBITDA c. 15.5x, in line with its European peers which trade at c. 21x FY 2014 PE ratio and 13.9x EV/EBITDA. Given its superior growth profile, it is likely to continue to outperform its peers.
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