Glanbia could up debt level for deals
Glanbia will "remain disciplined" in its acquisition activity as multiples in one of its key growth areas - performance nutrition - move even higher, according to chief executive Siobhan Talbot.
The company, which has spun off its 60pc holding in Dairy Ireland into the Glanbia joint venture, generated €1.18bn in revenue from continuing operations in the first six months of the year. That was 7.3pc higher on a constant currency basis.
Its performance nutrition business, whose products include everything from protein smoothies and energy bars to sports drinks, delivered revenue of €543.5m in the first half of the year.
Its earnings before interest and tax (EBITA) of €83.9m. On a constant currency basis, the figures were 5.4pc and 0.2pc higher respectively.
Glanbia's nutritionals division generated revenue of €642.2m and EBITA of €64.4m.
Those figures were up 9pc and 8.1pc respectively on a constant currency basis.
Glanbia's nutritionals division is its biggest - with revenue last year of €1.2bn and EBITA of €111.8m.
It makes and markets advanced-technology whey protein, specialist vitamin and mineral blends, plant-based ingredients and functional beverages.
It's also the biggest maker of American-style cheddar cheese in the United States. Kilkenny-based Glanbia told investors yesterday that it retains available bank facilities totalling €1bn. Its net debt to adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) stood at 1.63 times on July 1.
"At the year end, depending on how things pan out, not least because of the final consideration for Dairy Ireland, if we don't acquire between now and the year-end that could even end up around 1 times," said Ms Talbot.
"As a team, I think we would go up to three times (net debt to adjusted EBITDA), for the right opportunity and then maybe come down after that," she added.
"Basically, our ethos is that we'd like to keep our financing within investment grade metrics, while we're not rated."
She added that multiples in the nutritions sectors are "quite high" at the moment.
"I would say our history is to be very disciplined. That's not to say we won't stretch ourselves to the right opportunity, but financial discipline is really important to us."
Last month, Glanbia finalised a deal to sell its 60pc stake in a joint venture called Dairy Ireland to the Glanbia Co-Op.
Glanbia is receiving in excess of €200m from that sale and now holds a 40pc stake in the new joint venture, called Glanbia Ireland.
Glanbia has already received €112m of the proceeds and should receive the remainder by the end of October.