STRATEGIC REPORT
Business model
Delivering
better nutrition
Driven by our purpose to
deliver better nutrition for
every step of life’s journey
we serve salient trends in
society. We do this through
our consumer insights,
core capabilities and
strong culture.
Our vision is to be one of
the world’s top performing
nutrition companies trusted
to enrich lives every day.
Source
Our core ingredients are pure and clean
ingredients, such as milk and grains, from
the primary producers. In addition we
source inputs from other food
manufacturers across the globe. This
requires an in-depth understanding of our
raw ingredients markets and the
development of long-term, mutually
beneficial relationships with producers
to secure supply.
Capital
Inputs
Natural and
sustainable
Manufactured
Intellectual
How we do it
Through worldwide facilities
that meet the most stringent standards
and our supplier partnerships around
the globe, we ensure flexibility,
responsiveness and solid supply chains.
Human
Financial
Social and
relationships
Our Capabilities
Our core capabilities and assets enable us
to achieve our growth ambitions.
Read more on page 17
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Develop
Sell
We apply our deep sector knowledge,
collaborative approach and innovative
thinking to turn raw ingredients into branded
consumer products and high-quality
functional products and ingredients for our
customers and consumers worldwide. Our
innovative mindset and deep relationships
foster a culture of co-creation for
mutual benefit.
We are the global leader in the performance
nutrition industry with a portfolio of nine
leading consumer brands. As a nutritional
solutions provider in the B2B arena, we
commercialise specialty nutritional and
functional ingredients and precision
premixes to meet our customer needs.
Outputs
How we do it
How we do it
Business-to-Consumer (B2C)
Innovation sits at the heart of our business and
we continuously develop new products and
formats. Our consumer brands include a range of
formats such as powders, drinks, capsules,
tablets and bars. We also manufacture
substantially all of our own brands.
B2C
Each of our performance nutrition solutions
has its own brand essence and consumer
appeal. We are in the top three performance
nutrition brands in over 20 countries. We
also produce some of the leading Irish
consumer food and agribusiness brands.
Business-to-Business (B2B)
Our nutritional solutions business is a leading
marketer of advanced-technology whey protein,
specialist vitamin and mineral blends, plant-based
ingredients and functional beverages.
We are also the leading marketer of Americanstyle cheddar cheese in the US.
B2B
Our portfolio of both nutritional ingredients
and cheese gives us greater market reach and
customer relevance.
We work hand-in-hand with our customers
and develop products that exceed
their expectations.
How we do it
Our Consumers
Our Culture
Our ruthless focus on our customers’
and consumers’ needs places us at the
heart of major global market trends in food
and nutrition.
We foster a culture of shared values and
behaviours across the organisation which
enable, energise and support our employees.
Read more on page 18
Read more on page 32
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07
Socio-economic
uplift
Committed people
Loyal customers
and consumers
Engaged
shareholders
Environmental
awareness
STRATEGIC REPORT
Our strategy
Creating
sustainable
value
Strategic Priority
Maintain and grow
our global leadership
in performance
nutrition
Strategic objective
To maximise total returns to shareholders.
Strategic Priority
Key Performance Indicators (KPIs)
Sustain current
and drive further
ingredient market
leadership
in nutritional
solutions
We monitor our long-term progress by measuring
growth or improvement in seven financial KPIs and
two non-financial KPIs. These KPIs have been
identified by the Board as the most relevant to
delivering the Group’s strategy and objectives.
See pages 10 to 11 for more about our KPIs.
Strategic Priority
Grow through
organic investment
programme and
acquisition/partner
with complementary
businesses
Strategic Priority
Develop talent,
culture and values in
line with our growing
global scale
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2016 progress
Delivered strong EBITA and margin growth
through brand development, innovation and
strong focus on operational efficiencies;
Achieved consumer insight-led innovation
across new formats and channels; and
Successfully integrated thinkThin, leveraging
the platform for healthy snacks and bars.
2017 targets
Commission GPN innovation centre to
enhance our product offering and capabilities
and drive further growth;
Continue to drive branded revenue growth
across all markets; and
Pursue M&A opportunities and continue to
expand GPN’s consumer and channel reach.
Strategy-in-action:
Read more about
Performance
Nutrition brands on
page 22.
2016 progress
Delivered mid-single digit EBITA earnings
growth through further progression in
value-added ingredients;
Implemented organisational redesign and
leveraged commercial and strategic
capabilities to deliver our customers’
requirements; and
Expanded our innovation capabilities in
functional ingredients across key growth
sectors.
2017 targets
Build on 2016 and deliver earnings growth
through further progression in value-added
ingredients and cheese;
Informed by market, customer and consumer
insight, continue to innovate in the ingredients
space to exceed the needs of our customers;
and
Expand GN through organic growth,
acquisitions and strategic partnership.
Strategy-in-action:
Read more about the
Nutritional Solutions
business on page 24.
2016 progress
Successfully completed a capital expenditure
programme of €89.5 million – focusing on our
two strategic businesses GPN and GN;
Progressed acquisition of plant protein and
greens superfood business ‘Amazing Grass’
and online sports and wellness brand ‘Body &
Fit’ in early 2017 to expand GPN’s product
offering; and
Finalised a 25% capacity expansion
investment plan in our cheese and whey
Southwest Cheese facility in Clovis, New
Mexico. This will be commissioned in 2018.
2017 targets
Finalise Joint Venture plans to build a large
scale cheese and whey plant in the State of
Michigan, US to expand our GN business;
Continue to develop an acquisition pipeline
to grow our portfolio across the performance
nutrition and ingredients sectors;
Complete capital expenditure programme
of approximately €100 million; and
Develop recently acquired platforms of
‘Amazing Grass’ and ‘Body & Fit’.
Strategy-in-action:
Read more about
our Amazing Grass
acquisition on
page 23.
2016 progress
Further embedded values and behaviours
across the Group and completed an employee
engagement Pulse Survey;
Developed leadership talent programme to
secure pipeline of our next generation of
leaders and renewed focus on career
development and succession planning; and
Evolved a new HR strategy focusing on
leadership, talent, culture and operational
effectiveness.
2017 targets
Continue to embed our purpose, vision and
values across all levels of the Group, with an
employee centric approach;
Roll out HR transformation programme,
focusing on talent acquisition; and
Drive greater linkages between career
pathways, values performance and reward
across the Group.
Strategy-in-action:
Read more about
the Group’s purpose,
vision and values
on pages 32 to 35.
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09
STRATEGIC REPORT
Key Performance Indicators
Delivering
growth
Revenue
€2.8bn
2.8
2016
2.8
2015
2.5
2014
2.4
2013
2.2
2012
We monitor our performance by
measuring KPIs that we believe are
important to our longer term success.
Performance against some of these
KPIs is linked to the remuneration
arrangements of our Executive Directors
and senior executives.
Strategic relevance
Performance
While movements in commodity
dairy markets can influence revenue
movements in a specific year,
revenue growth, when viewed over
a period of time, is an indicator of
how Glanbia is succeeding in
developing the Group through its
on-going investment and
acquisitions programme.
In 2016, revenue was €2.8 billion, up
2.7% reported, an increase of 2.8%
constant currency on 2015. Volume
increases of 3.5% across all
segments were more than offset by
price declines, with acquisitions
accounting for a 3.3% increase
in revenues.
Adjusted Earnings Per Share 1,2
Definitions of KPIs are contained in the glossary on pages 186
to 193.
87.66c
87.66
2016
79.14
2015
61.16
2014
55.46
2013
51.34
2012
Strategic relevance
Performance
Adjusted Earnings Per Share (EPS)
is an important measure of the
profitability of the Group as it
represents the underlying profit of
the Group per equity share in issue.
Link to Strategic Priorities
Grow performance
nutrition
Adjusted EPS was 87.66 cent, up
10.8% reported, 11.2% constant
currency on 2015. This is the
seventh consecutive year of
double-digit constant currency EPS
growth. The compound annual
growth rate in adjusted EPS from
2012 to 2016 was 14.3%.
Total Shareholder Return2
(6.2%)
Organic and
acquisitional growth
one year
+46.1%
three years
%
500
Sustain and drive
nutritional solutions
400
Develop talent,
culture and values
Glanbia
300
200
100
0
NF Non-Financial
Key Performance
Indicators
STOXX Europe 600 Food and Beverage Index
Dec 2011
Dec 2012
Strategic relevance
Dec 2013
Dec 2014
Total Shareholder Return (TSR)
reflects the value delivered to
shareholders arising from the
ownership of Glanbia’s shares plus
dividends reinvested. Relative TSR,
compared to a specific peer group or
market index, is an important
measure of how successful the Group
has been in terms of shareholder
value creation, compared with its
peers over the same time period.
1. Performance condition of Glanbia’s Annual Incentive Scheme.
2. Performance condition of Glanbia’s Long Term Incentive Plan.
Glanbia plc | Annual Report and Accounts 2016
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Dec 2015
Performance
Dec 2016
Glanbia’s TSR in 2016 was a negative
6.2% following positive returns of
33.2% in 2015 and 16.9% in 2014.
TSR over the three-year period of
2014 to 2016 was 46.1%. Five-year
TSR was 257.1%. Glanbia’s share
price at the end of the financial year
was €15.78 (2015: €16.95)
underperforming the STOXX Europe
600 Food and Beverage Index by
5.4% in 2016.