Good morning, welcome to the Glanbia plc 2022 full year results call with Siobhán Talbot, Group Managing Director, and Mark Garvey, Group Finance Director. Today's conference is being recorded. At this time, I would like to turn the conference over to Liam Hennigan, Secretary and Head of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone. Welcome to the Glanbia full year 2022 analyst results presentation. During today's presentation and call, the directors may make forward-looking statements. These statements have been made by the directors in good faith based upon the information available to them up to their time of their approval of the Glanbia plc full year 2022 preliminary financial statements and analyst presentation. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The directors undertake no obligation to update any forward-looking statements made on today's call, whether as a result of new information, future events, or otherwise. I'm now handing over to Siobhán Talbot, Group Managing Director, Glanbia plc.
Good morning, everyone, welcome to the Glanbia full year 2022 results call and presentation. On today's call, I'll outline a summary of our 2022 performance and guidance for 2023. I'm joined by my colleague, Mark Garvey, who will cover the 2022 financial and operation results. I'll return to outline some of the strategic highlights, after which we'd be very happy to turn the call over to yourselves for questions. 2022 has been an important year from both a performance and strategic perspective for the group. Strategically, we completed a very thorough planning process. We evaluated strategic options, and we reaffirmed the strategic growth opportunity of our current business model. We're now very focused on driving growth in our better nutrition growth platforms of Glanbia Nutritionals, Nutritional Solutions, and GPN. We set out clear targets to sustain our momentum from previous to 2025.
In terms of performance, 2022 was all about navigating inflation while staying close to our consumers and customers and, of course, optimizing margins. The scale of inflation across both GPN and Nutritional Solutions was very significant. Our mitigation strategy was grounded in both a phased approach to pricing, where overall prices were raised by 19.7%, and also a strong drive to maximize operating efficiencies. We sustained key levels of investment for future growth and ultimately de-delivered margins in both growth platforms broadly in line with 2021 levels. The platform synergies across the group worked well for us in 2022, driving performance. Ultimately the teams delivered strong revenue growth, an adjusted EPS that reflects our highest earnings level, and a strengthening of our balance sheet, which gives us great opportunity to fund future growth.
In recent years, we've deployed capital to our growth opportunities, expanded our innovation capabilities, and continue to invest in hiring and developing our great talent, which is so key to our future growth. Our overall ESG agenda, which I'll touch on later, is increasingly embedded into our everyday ways of working. The investment case for Glanbia is now very clear. Our business is very closely aligned to powerful consumer trends. We've evolved and simplified our organization, our strategy, and our structure. As our market environment has altered, so have we. There is an incredibly strong, clear thread of nutrition in Glanbia that was grounded in dairy protein but now evolved to so much more. That more now means that we have attractive global positions in growing nutrition categories. In Glanbia, we match those consumer trends with our capabilities. We've defined the markets where we can best deploy our strengths.
They're large, they're growing, and we're very clear on our areas of focus within them. We've a strong culture and talent. We've scaled experienced, efficient operators on our manufacturing footprints. We build and operate assets with best-in-class efficiency, providing security of supply and quality assurance to our customers and consumers. Of course, and Mark will speak to later, we're financially disciplined, which gives us great option for future growth. These are all barriers to entry in our categories, difficult to replicate, and come from years of investment and optimization. Our strategic pillars are very clear: leading and growing our core, optimizing our business, and being disciplined financial managers. We do that through the strength of our leading global Nutritional Solutions business and our leading GPN global brands.
Our core today is the provision of consumer-focused, differentiated functional nutritional products across a range of science-based ingredient solutions and those leading brands. We're always navigating change as part of our DNA, really. Our markets and consumers have evolved, and we've evolved our portfolio in recent years such that 90% of our earnings now come from NS and GPN. Our business and operating model will continue to be refined to improve productivity and margins. Finally, to cash. A core ethos of Glanbia is our financial discipline. We're focused on cash conversion, capital allocation, and of course, shareholder returns. As Mark will speak to later, in the five years to 2022, we generated over $1.6 billion in cash, declared $400 million in dividends, returned $270 million buybacks, and also have invested in the business and acquisitions.
The essence of the evolution of Glanbia has been to move away from commodity processing to the higher margin, growing, added value areas of nutrition. As I mentioned earlier, that complementary thread of protein expertise runs across both businesses. Informed by increasing investment in consumer engagement, insights and our R&D, both businesses have extended significantly beyond protein, both organically and by acquisition, and now serve a variety of those consumer nutrition needs across multiple occasions, formats, and of course, geographies. On this strategic journey, we have significantly evolved our operating model to best serve our customers and consumers. We have aligned centers of excellence in areas such as financial operations, capital allocation, and risk management. With the business unit teams now really driving that one face to the customer, supported by those centers of excellence.
I'll speak a little bit more later to the specific strategic focus areas for GPN Nutritional Solutions. Our portfolio changes and focused strategic approach has served us well in navigating what has been volatile external environment in recent years, and this is ultimately reflected in our strong 22 performance. As a strategic pillar, we're always focused on simplifying our group structure and optimizing our overall margins. In 22, we completed the disposal of our 40% interest in Glanbia Ireland for $307 million. In the mozzarella joint ventures in Ireland and the U.K., Glanbia and Leprino Foods have enjoyed many years of successful partnership, but the time is now right for us to dispose of our 50% stake in the business to Leprino Foods.
This further streamlines our business model and is expected to provide capital of approximately $160 million, plus its potential $25 million earn-outs, to be ultimately allocated to our global growth platforms. We're ambitious to deploy capital across both these areas, adding to the capability, for example, we added with the acquisition of Sterling Technology in NS in 2022. Across these growth platforms, continued margin augmentation is also a key priority. In GPN, the multi-year transformation program was completed in 2022. It has outperformed its business case. This underpins business margins as we go forward and has enhanced key skills that were an important part of the inflation mitigation program for 2022. These actions, plus the price realizations that we achieved, led to an improving trend in GPN margins through 2022. We achieved the target of 12% EBITA margin in the second half.
In GN across the business, operational excellence is a hallmark of all of the teams. This continued focus on improving business mix all contributed to a 22% margin delivery in NS and GPN that was broadly in line with 2021, despite the significant dilutive effect of the high dairy markets we've referenced before. Looking back, in May 2018, we set out financial targets for the five-year period 2018 to 2022. It's very fair to note that when setting those targets, the scale and the tenure of the global disruption that would emerge from the global pandemic was completely unforeseen. The agility and resilience of the Glanbia teams, the evolution and strength of the group, Our customer and consumer relevance of the better nutrition elements of our business really came to the fore over this period.
We're therefore pleased to report that at a group level, we met all of our financial targets set out at that time across earnings, cash and cash conversion, return on capital, and dividend return to shareholders. We deliver this while also really having a very strategic focus on further strategic execution across the group. In November just gone, we set out our financial targets for the period 23-25. Having delivered a stronger 22 than anticipated, we're pleased to reaffirm those targets from this higher base. In 23 therefore, we plan to grow adjusted EPS between 5% and 10% on a constant currency basis. We continue to optimize investments, driving an operating cash flow of over 80% and are targeting a ROCE of between 10% and 13%. With that now, I'll hand over to Mark for some further detail on 22.
Thanks, Siobhán. Good morning. Let me add my welcome to everyone on the call. We are pleased to report results ahead of expectations for 2022. Revenue growth of 21.2% constant currency was driven by pricing across all of our businesses in an inflationary environment, with volumes broadly in line with the prior year for the group. Adjusted earnings per share growth from continuing operations was 17.6% constant currency and ahead of expectations. The group reported an adjusted earnings per share of just over $1.04 from continuing operations, compared to $0.778 in 2021. A reported increase of 33% impacted by a stronger dollar in 2022.
Operating cash flow conversion was at 85.7% ahead of the group's 80% target. The year-end net debt was $459 million, with a net debt to adjusted EBITDA ratio of 1.12 x. During the year, the Nutritional Solutions business completed the acquisition of Sterling Technology, a U.S. Bioactives company, for initial consideration of $60 million. In addition, the group's 40% interest in Glanbia Ireland was sold to Glanbia Co-operative for EUR 307 million. In terms of returns to shareholders, EUR 173.5 million was returned via share buybacks. The 2022 dividend has been increased by 10%. Operationally, firstly, turning to Glanbia Performance Nutrition.
Revenues were EUR 1.6 billion for the year, representing an increase of 13.9% constant currency over the prior year. Like for like, branded revenues were up 14.6%, with pricing up 16.7%, while volumes were down 2.1%. Pricing was driven by the execution of strategic price increases across all brands in all regions in response to inflationary trends. The most recent price increase taking effect in the fourth quarter. Volumes were particularly strong in the global Optimum Nutrition brand, and the overall volume decline was primarily driven by the SlimFast brand, where refresh activity is in progress. Optimum Nutrition is now almost a $1 billion brand and is a priority for brand investment and innovation.
We are pleased with the overall metric that in 2022, 85% of our portfolio in GPN delivered growth of over 20%. Through 2022, we closely monitored consumer demand and elasticity trends as we implemented a series of price increases. Overall demand was quite resilient, in particular for our largest global Optimum Nutrition brand. Given that the latest price increase was a double-digit increase in Q4 on some products, we will continue to monitor trends closely. EBITA in the business increased by 10.5% constant currency to EUR 182 million as positive pricing and GPN transformation program worked to mitigate the impacts of inflation and underpin margins. GPN 2022 EBITA margins at 11.2% were marginally higher than prior year.
We anticipated higher year-on-year cost of goods sold early in 2022, and our procurement decisions on supply, allied with our phased pricing actions with customers through the year, resulted in an improving margin trend as planned. We were pleased that the segment reported 12% EBITA margins for the second half of the year. Looking into GPN revenue movements in more detail, you can see here that we had strong revenue growth in both the Americas, where revenues were up 12.3% or like-for-like branded revenues up 13.2%, and international, which was up 16.3% constant currency. Revenue growth in all areas was due to higher price realization and revenue growth management initiatives. In the international business, there was volume growth in all key markets, with strong consumption trends in Europe, India, and Oceania in particular.
There was continued strong performance in the Optimum Nutrition brand, with consumption growth in 2022 of 30.8%. In lifestyle also across think!, Isopure, and Amazing Grass, consumption was good, with U.S. consumption up 13.9% last year. Headwinds in the overall diet category continued to impact SlimFast, where we saw overall U.S. consumption down 17.9% in 2022. The brand refresh is currently in market, supported by new branding and pack design, great content and innovation. Our channel mix continues to evolve positively as our reshaped operating model, particularly in North America, opens up more opportunity for our key brands. The FDMC channel is now our largest channel and is growing strongest, reflecting the return on increased brand investment as we broaden our consumer reach and distribution in this channel.
We're also gaining share online and seeing continued strong growth at 11%. Distributors, which include a significant portion of our international sales, were up 16%. We have spoken previously to the resilience and growth in powder consumption in recent years. This format is a particular strength of our brands, and in an inflationary environment, our powder products remain a relatively affordable protein source. In 2022, we had strong growth at 18% year-over-year. All formats grew, again speaking to the strength of our overall portfolio. Turning to Nutritional Solutions. Revenues for the year were EUR 1.1 billion, an increase of 16.6% over prior year. On a like-for-like basis, excluding acquisitions, revenues were up 12.6% constant currency.
Again, pricing was the primary driver of revenue growth, with pricing up 16.1%, driven primarily by higher dairy protein market prices. This pricing was offset by a volume decline of 3.5% for the year. The Dairy Protein Solutions business saw volumes down as it was impacted by customer inventory reductions and supply chain realignment in the second half of the year. The Customized Premix Solutions business reported an increase in volumes for the year as it continues to expand its customer base and geographic footprint. Nutritional Solutions increased EBITA by 13% to EUR 128 million, an EBITA margin of 11.4%, or marginally lower than the prior year. The margin performance was better than expected in the context of the dilutive effect of higher dairy pricing.
It reflects both improved product mix and an ongoing focus on operational efficiencies in the business. U.S. Cheese reported revenues of EUR 2.9 billion, an increase of 27.7% constant currency over prior year, primarily due to stronger cheese markets, driving a price impact of 23.4%. Volumes were up 4.3%, primarily due to the full year benefit of the Michigan cheese facility, which was commissioned in mid-2021. The business grew EBITA 33% constant currency to EUR 36.8 million, driven by the incremental volumes as well as operating efficiencies. Looking down through the income statement, you can see reported revenues of EUR 5.6 billion, up 21.2%. EBITA was EUR 347 million, up 13.5%.
Net finance costs were EUR 20.7 million compared to EUR 17.5 million in the prior year, primarily due to increased average debt levels during the year and a stronger U.S. dollar to euro exchange rate. Share of joint ventures income was EUR 15.4 million compared to EUR 2 million in 2021 as the Michigan cheese operation moved from commissioning into fully operational status. In 2023, we would expect the joint venture result to be lower following the planned divestment of the group's share of the Glanbia Cheese joint ventures. The group's effective tax rate was 12.5% in 2022, and we expect the tax rate to be between 13.5% and 14.5% in 2023, reflecting our geographic footprint and evolving regulations.
Adjusted earnings per share was $104.02, which was an increase of 17.6% in constant currency terms over the prior year. There was a net exceptional gain after tax for the year of EUR 21.4 million. The divestment of the group's interest in Glanbia Ireland generated an exceptional gain of EUR 57.2 million from discontinued operations. There were exceptional charges of EUR 43.8 million related to a non-core small bottling facility in the U.S., Aseptic Solutions, which was classified as held for sale at year-end to reduce the carrying value of certain assets to recoverable value. A sale is expected to be concluded by the end of the first half of 2023, with anticipated proceeds of approximately $10 million.
There were additional exceptional gains and charges relating to an adjustment to contingent payments, reorganization costs, and pension buyout costs, netting to a gain of EUR 2.3 million. The group had another strong year of cash generation, with operating cash flow of EUR 355 million compared to EUR 334 million in 2021. EBITDA conversion rate was just under 6% compared to 100% the prior year, in excess of our target of 80%. There was a working capital outflow of approximately EUR 40 million, mostly driven by higher inventory levels, primarily due to higher pricing year-over-year. We continue to target operating cash flow conversion at 80% or higher for 2023.
Return on capital employed was 11.1% for the year, an increase from 10% in 2021 and well within our target range of 10%-13%. The balance sheet is strong and the group is well-financed. Net debt at year-end was EUR 459 million compared to EUR 603 million at the end of 2021. Net debt to adjusted EBITDA has reduced to 1.12x at the end of 2022. The group's average interest rate for 2022 was 2.3%. Interest cover remains strong at 17x and well within our confidence. The group's debt facilities were renewed in December 2022. As a result, we have committed debt facilities of EUR 1.2 billion with a weighted average maturity of 5.8 years.
We discussed our capital allocation framework at our recent capital markets event in the U.S. The group has a balanced approach to organic and M&A investments and returning capital to shareholders via dividends and share buyback activity. In 2022, approximately EUR 50 million was allocated to strategic capital expenditure, which included ongoing capacity enhancements and a significant IT project to support an updated HR operating model. In 2023, we expect to spend between EUR 70 million and EUR 80 million in capital expenditure, including strategic and business-sustaining CapEx.
We continued our focused acquisition activity in Nutritional Solutions with an additional bolt-on Sterling Technology acquisition for $60 million plus contingent consideration. Sterling has complemented the existing ingredient technology portfolio of Nutritional Solutions, providing bioactive ingredients used in the growing immunity and gut health segments. The board has approved a final dividend increase of 10% for 2022, similar to the interim dividend increase.
The total dividend for 2022 interim and final will be EUR 0.3221, representing a payout ratio of approximately 31% and a dividend yield of approximately 2.7%. During 2022, the group deployed EUR 173.5 million in share buyback activity, buying back and canceling 14.9 million shares at an average price of EUR 11.65. Today, as a result of continued strong cash flow, we've announced a new EUR 50 million buyback, which will commence shortly. We announced this morning that the group has entered into a non-binding agreement with our joint venture partner, Leprino Foods, for the disposal of the group's interest in the Glanbia Cheese joint ventures in the U.K. and Ireland.
Transaction is expected to close in the first half of this year. The group expects to receive cash proceeds in excess of EUR 160 million, including the repayment of approximately EUR 60 million in shareholder loans. There is contingent consideration of up to EUR 25 million over three years, depending on the performance of the businesses. With completion expected in the first half of the year, the transaction is expected to be marginally diluted through adjusted earnings per share. We expect this to be mitigated by the share buyback program we're starting today. We also announced this morning that the group is changing its presentation currency from euros to US dollars. This is a logical step as our group portfolio has evolved and the significant majority of revenues and earnings are dollar-based.
With the recent joint venture portfolio, changes regarding Glanbia Ireland and the Glanbia Cheese joint ventures, the concentration of activity in dollars has further increased. The change, which will be effective from January 1st, 2023, and will reduce volatility between constant currency and reported performance being more closely aligned with the asset base of the group. We expect to issue historical data in U.S. dollars. By the end of March. With that, let me hand it back to Siobhán.
Thank you, Mark. The purpose of Glanbia in delivering better nutrition, as we had recently outlined in our capital markets event, goes to the heart of a key societal need. As we all know, the need for better nutrition in support of a healthy, active lifestyle was never clearer than in a post-COVID world. There are many global challenges, the increased prevalence of non-communicable diseases, the challenge of global obesity, the personal and societal cost of poor nutrition. The need to address these challenges continues to grow and, of course, consumers are responding. This response is driving key trends in consumer nutrition. Individuals and governments recognize that ultimately prevention is so much better than medication. Consumers are taking more control of their total health and well-being. As consumers, we want authenticity. We want ingredients and brands that meet our needs. We want to understand the ingredients we consume.
We want convenience without compromising taste, functionality or nutritional content. As consumers, we support authenticity, functionality, sustainability. The Glanbia portfolio is completely aligned to these trends. We serve a number of key categories, our three top nutrition categories represent an addressable market of almost $100 billion with average growth rates in that mid-single digits. In Glanbia Performance Nutrition and Glanbia Nutritionals, we have built leadership positions that are difficult to replicate. We have the number one brand in sports nutrition with Optimum Nutrition, which is approaching $1 billion in revenue and well north of that amount at retail sales value. In ingredients, our protein business is built upon our innovative whey solutions, where we are number one in scale in the U.S. Our custom premix solutions business is built on our micronutrient expertise, where we're number two globally. GPN has very clear strategic priorities.
We will drive the global scale and reach of ON. We'll broaden and deepen the availability of our lifestyle nutrition brands in North America. We will grow with the focus on ON in key international markets. As a key growth channel for our consumers, we'll refine and grow our e-commerce capabilities. In 2022, all of these priorities were on track. As Mark has outlined, the global performance of the ON brand continues to grow, supported by brand investments, clear execution, and a strong and reframed operating model post the transformation program. ON grew like-for-like revenues by 24% last year, with also very strong consumption. Brands such as Isopure continue to also grow strongly, and our healthy lifestyle brand portfolio overall grew like-for-like revenue by 25%.
We have more to do with SlimFast. The execution of the brand refresh is in market. As we said in November, we expect to see those results later in 2023. As Mark has outlined, with growth in 2022 in both Americas and the international region, we grew across all channels and indeed across all formats. As the number one sports global nutrition business, we've a really strong brand platform in GPN. The business is now scaled at $1.6 billion. We're really ambitious to continue to drive growth, particularly for ON, which is clearly the biggest brand. It's growing fastest and has the greatest potential for future growth momentum. The momentum of ON makes it the number one brand in 18 countries, including the U.S.
As a mainstream brand, it has now scaled in online and FDMC channels, is growing strongly in those channels, and they will be a key driver of future growth. The remaining brand portfolio is highly complementary to ON, with 85% of our portfolio growing by over 20% in 2022, we will deploy the skills that fuels the momentum of ON to our other brands. At our recent capital markets event, we showcased the strength of the ON brand specifically. In recent years, we've significantly upweighted both our investment in consumer analyticals and our brand investments. We've engaged with consumers and navigated a period of unprecedented inflation through a measured, phased approach to pricing. This has delivered significant pricing growth in 2022, but also sustained volume, with overall global volume growth for the brand of 5%. We had 19% pricing growth.
ON has grown by 45% since 2019. It is built on authenticity and trust. We continue to innovate and broaden and deepen our global distribution and consumer reach and relevance of this brand for a wider range of consumers. It's also important to speak about the ON consumer in the context of the economic climate we see today. Our products, at their essence, are affordable for consumers. Our consumers typically have 19% higher income, spend 28% more on sports nutrition, and work out 80% more often. This is an essential spend as part of their lifestyle. Our strategic priorities for 2023 remain the same as those set out at our capital markets day in November. We're ambitious for growth and can build on the momentum of GPN in recent years.
In 2023, we plan to deliver revenue growth of between 5%-7%, which will be pricing driven. We've upweighted our margin guidance as we're now seeing a declining trend in key dairy pricing, and we'd expect to see that coming through in the second half of this year based on our procurement profile. That will deliver an EBITA margin of over 12.5% for the year, with an improving trend as we go through that second half. Likewise, in Nutritional Solutions, we have clear priorities. As I mentioned earlier, we're a leader in both custom premix solutions and Protein Solutions. With these businesses growing like for like by 3.6% and almost 21% respectively for 2022. We will continue to extend our expertise in these and, in both these and other complementary areas, both organically and by acquisition.
Nutritional Solutions is a great platform for acquisitions. Our operating model and our capabilities are scalable, and our recent complementary acquisitions are performing well, including Sterling Technology, an immunity solutions provider just completed early this year. Our Nutritional Solutions platform as a scale business grew by almost 17% last year. These categories have driven growth in volumes over the last four years of almost 5%. Our competitive advantage is clear. We have a unique access to ingredients, particularly in dairy protein and micronutrients. We have invested in talent and innovation to drive very strong customer collaboration and accelerated development potential across our global network.
We can be that complete bridge for our customers across the supply chain, where we have strong operational execution and supply chain expertise. All of these capabilities have driven sustained momentum in recent years in Nutritional Solutions. As outlined, both areas have grown strongly with a four-year CAGR in premix of 14.6% and in protein of 15.1%. At our recent capital markets event, again, we set out the ambitions for NS over that period 2023 to 2025, and today we're reaffirming those ambitions. We recognize there are some very near-term customer inventory rebalancing trends which will reduce volumes in the first half of 2023. We expect that to normalize in the second part of the year and therefore sustain volumes in 2023 at that 2022 level.
Unsurprisingly, the declining dairy market trend that will help increase margins in GPN in the second half of 2023 will reduce revenue in Nutritional Solutions over the year. Overall, we expect margin improvement on 2022 levels, and we expect it to be in the range of 12%-13%, with earnings broadly in line with the prior year. Margins will be improved by an improving business mix, continued operational efficiencies, and of course, the reversal of that 2022 dilution effects of high dairy markets that we've referenced. In Glanbia, our ESG agenda sits at the core of our strategy and operations and has for many years. We have made significant strides in this area in recent years. In 2022, we up-weighted our emissions reductions targets and are now targeting a 50% reduction in Scope 1 and 2 emissions by 2030.
That's consistent with the 1.5 degrees Celsius roadmap. We've also set clear targets on water usage, waste reduction, and packaging recyclability. Our overall culture is strong in Glanbia, and a culture of diversity, equity, and inclusion is now increasingly embedded across the business. It's a journey. We have more to do, but are pleased to see an increasing level of female participation, both at board and management levels. Health and safety has always been a hallmark of the group, and it's a really important part of our culture. We're very pleased to see continued great progress in 2022, with our incident rates well below industry benchmarks. As an organization to maintain focus on the totality of the ESG agenda, it is now fully linked into our remuneration framework. Turning then specifically to 2023, this chart brings together a summary of the component parts of our guidance.
We remain confident in delivering the financial ambition outlined in our capital markets event in November for that period 2023-2025. For 2023, specifically based on the current market environment and our expectations for the remainder of the year, our overall expectation is to deliver between 5% and 10% adjusted earnings per share growth in 2023 on a constant currency basis. Within this overall picture, we expect GPN revenue to grow between 5% and 7%, again constant currency, and full-year margins of over 12.5%. GPN revenue will be primarily driven by pricing, and we continue to closely monitor consumer demand and customer inventory levels. In NS, as I've referenced, that decline in dairy revenue will lower like-for-like revenue in the year, with volumes expected to be broadly in line with full year 2022.
Our margins, as I've referenced, will be between 12% and 13%. Group EBITDA growth for 2023 is expected to be largely driven by growth in GN earnings. GNNF and U.S. Cheese will be broadly in line with 2022, and the performance of the joint ventures will be somewhat reduced, as Mark referenced on the disposal of the Glanbia Cheese JVs. We continue to target our cash conversion of over 20% and the return on capital metrics previously outlined. Glanbia as an organization has changed enormously since 2018 when we set out our prior targets. We've done a lot of work in evolving and simplifying our organization, our strategy, and our structure. The market has altered and so too has Glanbia. Our customers and consumers are our key foundation, and we will continue to work at building trust and relevance as our markets change.
As we've evolved our strategy, we've invested to enable its execution. We have superb teams, a great blend of experienced and new talents. We are curious, we are innovative by nature, and we have and will continue to invest in areas that keep us front of mind for customers and consumers across all elements of the supply chain. We will always be evolving and reshaping, and we will always challenge ourselves to find better ways to meet those consumer and customer unique needs. Our business is unique. The capabilities and teams we've built are unique. From this, we believe we have a really strong base to drive sustainable future growth for both 2023 and the years ahead. Thank you very much. With that operator, we'd be very happy to take any questions.
Thank you. If you would like to ask a question, then please dial into the conference call and press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure that your phone is unmuted locally. As a reminder, that is star followed by one to ask a question. Our first question comes from Alex Sloane from Barclays. Alex, please go ahead.
Yeah. Hi. Morning, Siobhán, Mark, and Liam. Thanks for taking the questions. I've got a couple if that's all right. Just firstly on cash flow, really strong performance in 2022 with net debt coming in a fair bit below consensus. I know there's been a lot of progress on capital management in recent years.
Is there any timing benefits to cash flow in the second half, or is that net debt number a reasonably good basis to build from, going forward? Just in GPN, could you maybe talk about the competitive environment in GPN in the context of those easing whey input costs, and also, how customer inventory levels are looking in GPN across your key geographies and customer channels? Thanks.
Hi, Alex. From a cash flow perspective, you're right. We're very pleased, in fact, with where the results came in for the year. We do have strong working capital management in terms of what we're doing across the board. It was a challenging year for working capital with inventory in particular. We did see that increased because of primarily two things, I suppose, supply chain management and also just pricing increases. We began to mitigate that more towards the end of the year, so therefore we were pleased with that. Overall, in terms of timing, there are some things back and forth, but nothing significant. From a debt perspective, you have a base that you can build on there.
Thank you, Alex. In relation to GPN, first comment I would make in terms of the direction of travel of whey is that we're really not going to see that until the second half of 2023. In that context, we're not seeing any particular competitive activity at this point in time. The market's very much as it would normally be in terms of activity that would normally be happening in the first half of the year. We'll see how that evolves through the, through the latter part of the year ahead. Customer inventory levels, they can ebb and flow as we've seen. I mean, we've seen a little bit of it customers reducing their inventory more as a 23 piece. Nothing that would concern us there. I think the market inventories are probably pretty solid at this point in time.
That's helpful. Thank you.
Thank you.
Thank you. Our next question comes from Lauren Molyneux from Citi. Lauren, please go ahead.
Hi. Thanks for taking my question. I just had a couple. The first one on your GPN guidance. Obviously, you're guiding to that 12.5% margin for this year. I was wondering if you could help understand, as I understand the details in the bridge here, what are you assuming happens with price and volume in order to get to that 12.5%? What do you assume in terms of the stickiness of pricing and whether you have to rest behind pricing in H2? Also just coming back to that point on whey input cost inflation, can you give us an idea of kind of the magnitude of that whey inflation and how that evolves?
Also whether you need that whey inflation to come down, obviously, in order to meet that 12.5% target that you have. The second question would be on Nutritional Solutions and the destocking point that you make. Obviously, this looks like it was a slightly bigger headwind for you in Q4 than maybe we'd initially expected. Can you talk a bit about the kind of development of customer behaviors? Obviously, that's something you're expecting in H1 to continue, but how much visibility do you have into the channel and kind of at what magnitude of an unwind of inventories should we expect in H1? Thank you.
Hi, Lauren. How are you? Just in terms of your questions, if I don't get everything, I apologize. There's a lot in there. Firstly, from the GPN margin perspective, that we do expect, as we said, 12.5%+ for the year. That obviously is a guide we put out with confidence based on how we're seeing things evolve. Firstly, we've taken significant price increases over the last year. The last one was done in October, and we expect that to be sticky and we expect that to be in the market for the coming year. We do expect to see some benefit coming through in the second half on sort of input costs, particularly on whey.
We wouldn't expect to see that in the first half 'cause that's pretty much locked in based on how the market's evolved over the last number of months. We will see some of that benefit coming in. That certainly is helping in terms of our view on 12.5%. To call that more than that at this point is quite difficult. I mean, the markets are moving. They're certainly coming down at the moment. We'll take our procurement decisions, I suppose, in a measured way over the next number of months as we evolve into that. I guess by the time we come out in the first quarter, we'll have more visibility into the second half. That's our current view.
In terms of Nutritional Solutions, yes, we are seeing, we have been seeing some destocking happening in not only the Protein Solutions side of the business, but also on the premix side of the business. That is, I think, a reaction that we're seeing across the ingredients space, as a lot of companies now react to maybe a more favorable supply chain environment where they can have reduced inventories. What our customers are telling us that demand out there is quite robust. From that perspective, we would say that we are comfortable enough that as this stabilizes over the first half, that we'll see that, basically come back to a normal level in the second half of the year at this point.
Great. Thank you.
Thank you. Our next question comes from Jason Molins from Goodbody. Jason, please go ahead.
Hi. Good morning. Well done first on a good set of numbers today. Just really trying to unpick the volume performance that you delivered particularly in the GPN business, and maybe some softer trends seen in Q4. Can you maybe just talk about how that manifested itself versus your expectations? Just really in terms of the international business that's actually been quite strong for you, and so maybe a bit of color on the key drivers there. In terms of marketing investment that you're thinking for the year ahead, how should we think about that as a % of sales? How will that trend or what are your expectations how that trends? As the year unfolds, given the wave price backdrop that you've mentioned starting to help, as the year progresses. Thank you.
Thanks, Jason, good morning. Happy to give you color indeed on Q4. Really the driver of the volume decline in Q4 actually was SlimFast. That wasn't a surprise to us. As we referenced at the capital market event, we're doing a lot with the brand refresh, but we really don't see that brand gaining traction until the latter part of 2023, and we factor that into all our views for 2023. In fact, if you look at our core brand, Optimum Nutrition in Q4, it had very good volume growth and very good pricing growth. You might remember that we referenced globally ON, I think, at Q3, we had 5% volume, almost 20% price. In fact, that was the same statistic when you look at the full year.
Still very good volume momentum sustaining both from a revenue perspective, but indeed also from a consumption perspective for ON. SlimFast was the one bringing it back, but that's very much a hand, and it wasn't a surprise in truth to us as we moved through Q4. Internationally, yes, pleased to see that business, you know, again, took a lot of pricing action internationally in response to the inflation trends that we've seen. Lot of good work being done by the teams right across the regions. Very much an ON focus as we've spoken to internationally as well. We can really leverage that strength of the brand that we have and take us across different geographies. It travels well, as we know. Pleased with that overall.
In terms of marketing, yes, one of the things we did, and you might remember, that we particularly up-weighted marketing in the back end of 2021, in fact, as we were coming through into that inflationary environment, working to stay very close to our consumers, and we continued to invest in our brands through that 2022 period. In fact, I would think we would probably up-weight our investment again as we look into 2023, particularly across the core brands. We'll be spending some investment on SlimFast as we move through the year, but particularly a focus in ON as you would expect.
Again, that would be part of the equation as we look at some of the tailwinds and changing environment for cost of goods, managing that overall piece within the margin growth will, I would expect at this point, be an increased level of brand investment.
Thank you.
Thank you.
Thank you. Our next question comes from Rashad Kawan from Morgan Stanley. Rashad, please go ahead.
Hey, thanks, Siobhán, Mark, and Liam for taking my questions. Good morning. A couple from me. The first one, how should we think about your midterm outlook in the context of the 2023 guide? I mean, you're expecting 12-12.5%+ for GPN, then somewhere around the 12%-13% range for margins, both within the 12%+ of your midterm guide. Is the midterm guide overly conservative at this point, particularly at the margin end? Then my second question on SlimFast. I know you said it's still been a drag in Q4, obviously, are there any early signs of consumer take-up or anything you can point to with respect to the brand refresh that gives you any signs of encouragement? I mean, what are you, also, what are you assuming for the brand as part of the 5%-7%, like for like, guide there? Thank you.
Hey, Rashad, how are you? Good morning. No, at this point, we wouldn't be changing our midterm guidance. I think, what we said in November was that we gave revenue guidance of 5%-7% in GPN. We gave 3%-5% volume guidance in Nutritional Solutions, and we gave that 12%+, margin guidance as well, obviously. Our view was that was going to be an average as we looked over the three years, so you will have some puts and takes. You know, as we look at this year, for example, we're now very comfortable that we are going to have, you know, 12.5%+ in Performance Nutrition. I think we'll manage that as we go through the year.
If we look over the three-year cycle, I think we're still very comfortable with our current guidance. As we look at volumes, for example, this year in Nutritional Solutions, it is below our 3%-5% midterm, but we view that as a guidance that's very comfortable for the three years, but we do have some destocking in the first half. We are gonna have some puts and takes, Rashad, as we go through that, currently we'd be comfortable with the midterm guidance that we outlined.
In terms of SlimFast, just a few observations. I think firstly, we remain very positive about the brand. It has very strong brand awareness. We speak a lot to our consumers. We know that a lot of consumers really want products that will assist them in that weight maintenance program. As you know, we're broadening the consumer reach, and that's a big part of the brand refresh, is making the brand through the creative, through the new packaging, appeal to a broader range of consumers. I think it is very early days. Again, as we said in November, we're very clear on our own targets that we will actually be investing behind the brand as we go through the year. I think also the context of what has happened with the SlimFast brand over recent times isn't unimportant.
Really, as you might remember, we had a very strong Keto performance that was very much on trend through that 2019 into early COVID period of 2020. Really what's happened is that that has come off. We have lost listings on Keto specifically. The rest of the brand is actually really holding its own. What we're driving now will be the higher protein, the ready-to-drinks, that core range of SlimFast as we go through. We are very optimistic in our ability to do that when we speak with our retail partners and indeed our consumers. For 2023, we don't, you know, we're not expecting any major turnaround in the brand, and that's all factored into our 5%-7% overall for GPN. That'll be a journey as we go through the period.
Clearly, as we've said, as we move out of 2023 into the year, the years 2024 and 2025, absolutely, we would expect to be, to see growth regained in SlimFast.
Thank you very much.
Thank you. Our next question comes from Karel Zoete from Kepler Cheuvreux. Karel, please go ahead.
Yes, good morning. Thanks for taking the question. I have a couple of questions. The first one is on the formats within GPN. You show that powders are doing really, really well, but ready to drink and ready to eat has just 2%-3%, whereas that is obviously a big strategic focus for some time. What's hindering growth last year in these formats? Is it the price proposition? Is it, yeah, the innovation agenda? Then a question on GPN as well, the progress with the strategic agenda regarding your direct to consumer model outside the U.S. Growth has been 6% last year. Yeah, so can you speak about what progress you've made and where we stand today? The last one is on, yeah, on the exceptionals.
You highlight a write-off on Aseptic Solutions, a business I think you bought for about $60 million a decade ago. Did I hear right, you expect procedures around $10 million? On LevlUp, is the benefit, does that mean that the burnout is conditions are unlikely to be met? Why was there a benefit to LevlUp? Thank you.
Hi, Karel. Good morning to you. There's a few things there. If I don't get to everything, make sure you remind me, but the first one was on the formats. Again, from a sports nutrition and lifestyle perspective, we're very comfortable actually with the progress we're making on ready to eat and ready to drink. The reason why they would be lower is SlimFast, of course, is impacting those numbers on the like-for-like basis. Yes, when we look at that really is what's causing it. Your question is a valid one. The innovations are actually doing really well. The Amin.O. Energy Sparkling, the protein shakes, et cetera, and Optimum Nutrition have been doing very well.
On the direct to consumer model, you know, the Body & Fit business actually did quite well last year. Again, making good progress there. Obviously, we're integrating LevlUp with that over the last year as well. Comfortable enough with the progress actually we're making on direct to consumer and the technology we've put in there, again, working really well also. The two questions you asked on Aseptic Solutions and LevlUp specifically. Yes, Aseptic Solutions is really a non-core business within Nutritional Solutions, the small bottling facility over in California. Yes, we'll be selling that for approximately $10 million is what we expect to see. That's why, of course, we have that adjustment in exceptional items. Again, it's non-core. We don't want to be spending any more management time on that.
We're really organizing that to be moved out of the group. Then on LevlUp, again, your point is valid there. We did have a gain coming through in contingency there on the contingent payment there, because we won't in fact, have to make that payment based on performance criteria. I mean, that was really how we did the deal, Karel, to make sure that we're not going to overpay based on what may have been the expectations originally versus what we felt were the real expectations. We won't have to make those contingent payments, and we think that that's appropriate. That's why you see that gain coming through on the exceptional items charge.
Right. Thank you. That's clear.
Thank you. Our next question comes from Faham Baig from Credit Suisse. Faham, please go ahead.
Thanks for the questions too from me as well. In a theme across consumer for at least the past year. On sports nutrition specifically, how does your pricing compare by the market and peers? The second question is Nutritional Solutions, where you're looking to scale up through M&A. I guess that's also a theme across the broader ingredient sector. How do you see competition for the assets that you're looking at and then thereby the potential multiples you're looking to pay? Thanks.
Thank you. I'll take the first question, and I'll pass the second one to Mark. Forgive me. I think you're moving in and out a little, but I think I caught the question, which was about pricing of GPN relative to our peers. I would say our approach actually worked well within an overall market context because we took quite a phased approach. If you remember at the back end of 2021, we had the insights to see that dairy markets were rising, so we actually started our pricing journey for a lot of our SKUs in the latter part of 2021 and then moved sequentially with, as Mark referenced, the largest one, in fact, just went through in the latter part of 2022. As the whole market moved on pricing, the scale of input cost was significant. Again, our procurement helped us through 2022.
We didn't go to the spikes that some of our competitors had possibly did. I would say the whole market moved actually. Clearly across different SKUs, there will be different relativities at different points in time. The key piece for us, and I think ultimately where it all comes together, was if you take that global brand of Optimum Nutrition, our largest brand, took significant pricing through the year of 19%, and we had volume growth of 5%. I think what that's telling you is that the brand really had that pricing power in taking that phased approach through and investing also behind the brand, behind marketing, behind consumer relevance, using all of our activation programs that we could so that we could keep front of mind of consumers as where we're traveling through that. I think that maintained a good relative position. Mark, possibly.
Good morning. To your question on M&A, I would say firstly our focus continues to be on Nutritional Solutions from an M&A perspective. We've been very pleased with the last four deals that we've done, which have been in a reasonably non-competitive environment, to be fair. We've been able to buy those business at a reasonable multiple. I would say for larger ingredients opportunities, there is more competition. We certainly are looking at things as well, and if we see something we're interested in, we clearly have the capacity to acquire. Again, we're mindful of multiples, we're mindful of returns because we have a returning capital employed target as well, and we do things sensibly. Certainly I would say it's more competitive in obviously an environment where there's a bigger opportunity out there right now.
Very much.
Thank you. As a reminder, to ask a question, please press star followed by one. Our next question comes from Cathal Kenny from Davy. Cathal, please go ahead.
Good morning. Thanks for taking my questions. A couple of quick questions from my side. Firstly, on innovation, is there an opportunity to scale up that innovation within GPN in 2023, namely on protein shakes and energy? My second question relates to just can you clarify what the mathematical dilution was to margin within NS for 2022? Thirdly, just the outlook for working capital from a cash flow perspective in 2023, Mark? Finally, on strategy, obviously in light of this morning's announcement, just wondering, Siobhán, is there much more to go in terms of portfolio reshaping? Thank you.
Thanks, Cathal. I'll pick up a few of the points and I'll pass one of them to Mark as well. Yes, I think on GPN, you know, we've done a lot of work in transforming GPN over recent years. I think the business is in really good shape now across a number of different dimensions. Category, the brand is really brand like ON, really holding its own within that space, and we're very confident of that long-term category growth that in fact we can get across the total health and wellness space for both GPN and NS. I think part of the journey that we're going to travel now through 2023 when we see some of those what were very severe headwinds on cost of goods alleviating will be dialing up things like our brand investment, like the innovation agenda.
I think the brand really has the license to travel. It's very strong, as we've said repeatedly in powders. I think they've come into their own in recent times, not least from an affordability. From a consumer perspective, they are great products that are good value. Also as you know, we're dialing up the ready-to-drink, the things like the energy proposition, and I think we'll have really good opportunity to do more and more of that as we look forward. In terms of Nutritional Solutions, specifically, yes, the margin dilution was over 100 basis points in terms of the dairy piece that we saw through 2022. The teams did a really good job mitigating that both by driving better business mix, as I said, and they're a very good team at driving operational efficiencies through really focusing on margin.
Strategically, I would say, Cathal, we have a really good portfolio in the business now. You know, we really are focused down on what we call that better nutrition strategy. Both Nutritional Solutions in particular and GPN have very strong opportunities in the categories in which we operate globally. I think we, having done a lot of work at it through 2022, we'd be pleased now with the overall structure. We have, you know, our joint ventures in the U.S., very different model to what we've used in Europe historically. They really give that feedstock into that Nutritional Solutions business. NS and GPN will be the focus for growth.
Yeah, on working capital, again, as a lot of work done last year, I'd expect it to be relatively neutral at this point, Cathal. I think we'll monitor this as you go through the year. Obviously, some of the inventory favorability will help, so we'll get some benefit from that as well. Overall, there might be a small working capital inflow basically as you go through the year, but we have a lot to judge on that still to come.
Thank you.
Thank you. Our final question comes from Fatma Agnès Hamdani from Oddo BHF. Fatma, please go ahead.
Yes. Hello to all. Could you give me, give us, some comments on, the U.S. class action related to think! brands, and artificial, sweetness, and how are you managing that, and does it affect GPN volumes today? Thank you.
Thank you, Fatma. No, we would not be concerned, and we obviously have a lot of expertise in terms of dealing with any issues that come up with our brands. No, not concerned. We will just handle those in the normal rhythms of the business.
Okay. Thank you.
Thank you.
Thank you. We currently have no further questions. I'll now hand you back over to Siobhán Talbot for closing remarks.
Just remains for me to thank you all for your, time this morning, and as always, be happy to, deal with any follow-up questions that you may have. Thank you and good morning.
This concludes today's call. Thank you for joining. You may now disconnect your lines.