Good day, and thank you for standing by. Welcome to the Glanbia 2025 full year results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I will now hand over to Liam Hennigan, Group Secretary and Head of Investor Relations, to open the presentation. Please go ahead.
Thank you. Good morning, and welcome to the Glanbia full year 2025 results call. During today's call, the directors may make forward-looking statements. These statements have been made by the directors in good faith, based on the information available to them up to the time of their approval of the full year 2025 results. 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 information made on today's call, whether as a result of new information, future events, or otherwise. I'm now handing the call over to Hugh McGuire, CEO of Glanbia plc.
Thank you, Liam. Good morning, everybody, welcome to the Glanbia full year 2025 results call and presentation. I'm joined on today's call by Mark Garvey. I will provide an overview of our performance for the year. Mark will then cover the financials and outlook. At the end of the call, we will be happy to take your questions. Overall, we delivered a robust performance in 2025, with like-for-like revenue and volume growth across all three segments, driven by strong consumer demand for our better nutrition brands and ingredients, with adjusted earnings per share of $1.3493.
The group delivered pre-exceptional EBITDA of EUR 499.1 million, representing a decrease of 9.4%, and EBITDA margins of 12.6%, representing a decrease of 170 basis points on a constant currency basis, with margin expansion in Health & Nutrition offset by a contraction in margin in performance nutrition as a result of elevated whey input costs. We continued our strong track record of delivering returns to shareholders by raising the interim dividend by 10% and returning approximately EUR 197 million to shareholders via our share buyback programs. The board has authorized a further EUR 100 million share buyback program. We will commence an initial EUR 50 million tranche of this program today.
As well as delivering a strong operational and financial performance, we continue to progress our strategic agenda. We made significant progress on our group-wide transformation program, with a new operating model implemented to simplify our business and bring greater focus on high growth opportunities. We continue to make good progress on our portfolio with the sale of non-core brands completed during the year. We also acquired SweetMix, a Brazil-based nutritional premix and ingredient solutions business within our Health & Nutrition division, and agreed to acquire Scicore, a manufacturing facility in India, which provides in-market manufacturing for both performance nutrition and Health & Nutrition, with the acquisition completing post-year-end.
We hosted our Capital Markets Day on the 19th of November in London, where we outlined the group's growth strategy for the next 3 years, focused on 5 key drivers and our financial ambition for the period 2026 to 2028, and our confidence in driving continued shareholder return. We were pleased with the positive response and interest from attendees and look forward to delivering on our medium-term ambitions. For performance nutrition, like-for-like revenue increased by 4.5%, excluding the impact of non-core brands, which was driven by our 2 priority growth brands, Optimum Nutrition and Isopure, and was a combination of strong category growth, increased distribution, and innovation.
The volume increase was driven by strong growth in the online and Food, Drug, Mass channels, as well as continued growth in international markets across both protein and energy categories, somewhat offset by lower revenues in the U.S. club and specialty channels. We implemented price increases in our international markets in quarter two and in the U.S. in quarter four to offset record whey inflation. During the year, we also implemented some tactical price reductions on higher margin products in the energy category, which delivered a strong volume uplift. From a regional perspective, Performance Nutrition Americas, which represented 63% of revenue, was down 0.5% versus last year due to the aforementioned club channel headwinds. Excluding non-core brands, Performance Nutrition Americas revenue increased by 1.3%.
We are pleased with the trajectory in our flagship brand, Optimum Nutrition, which showed a sequential improvement through the period, delivering double-digit like-for-like revenue growth in the second half of the year, but continued momentum in the protein powders and energy category. Our international business, which represents 37% of revenue, performed strongly, delivering like-for-like revenue growth of 8.8% or 10.5%, excluding the impacts of non-core brands, driven by volume and pricing growth in the Optimum Nutrition brand, particularly in China, India, Oceania, and the UK. Growth was supported by our global supply chain footprint, enabling in-market supply and local innovation in key regions. EBITDA for the year declined by 23.2%, with an EBITDA margin of 13%.
The contraction in margin is entirely as a result of record whey input costs, as previously disclosed, with an improvement in EBITDA margins in the second half of the year. In terms of brand performance, Optimum Nutrition, our largest brand at 75% of performance nutrition revenue, excluding non-core brands, delivered like-for-like revenue growth of 6.4%, comprising volume growth of 5% and pricing growth of 1.4%. ON delivered double-digit like-for-like revenue growth in the second half of the year, led by a combination of strong velocities, distribution gains, lapping of a weaker comparative in the U.S. club channel, and innovation. We continue to see strong momentum in the category, with an acceleration of the growth of the protein powder category in the last 12 months.
U.S. consumption grew by 3.4% in the last 52 weeks, with double-digit growth in the Food, Drug, Mass channel, growing ahead of the category, and continued strong growth in the online channel. In the last 13 weeks, U.S. consumption accelerated to 4.6%, ON continues to be a top driver of retail dollar consumption growth for protein powder and creatine in measured channels in the U.S. We're also seeing strong consumption growth across many international regions, we continue to increase our retail distribution, with distribution gains for ON across retailers in Europe and Asia Pacific, double-digit growth in e-commerce channels in China. I'm pleased to see ON deliver double-digit growth in household penetration and TDP in the U.S., reflecting strong recruitment and retention.
We have an uncompromising dedication to product quality, and we are operating in high-growth categories with the most trusted brands in sports nutrition, driven by powerful consumer megatrends. From a marketing perspective, our focus continues to be on driving recruitment and conversion, and broadening the brand's appeal through increased campaign reach and education. We've just launched The Optimum Advantage campaign, a disruptive campaign rolling out globally, where the concept involves elite athletes revealing one thing they never want to share, the marginal gains that give them their edge. The launch features McLaren Formula 1 star, Lando Norris, Rugby Internationals Dan Sheehan from Ireland, and Marcus Smith from England, and U.S. WNBA star, Cameron Brink. Early results show that The Optimum Advantage athlete strategy is driving both scalable media efficiency and authentic cultural relevance across channels.
The AI-powered coach, Optimum, went live in several markets during 2025, with results showing excellent engagement rates. The protein calculator has been going from strength to strength, helping consumer realize how Optimum Nutrition can help them fulfill their daily nutrition needs with trusted, high-quality products. We've also seen strong growth being driven by online channels and the success of the quick commerce channel in India. We have a world-class portfolio of high-quality products within the Optimum Nutrition brand, and we've continued to focus on innovation, in particular by expanding our usage occasions. We launched a number of products during the year across our protein and energy offerings, including multiple creatine offerings, whey collagen blends, protein RTD shakes, and additional smaller pack sizes, including stick packs, addressing affordability through opening price points.
We're particularly pleased with the performance of ON Creatine, which delivered strong growth globally as we continue to cement our number one position in this fast-growing segment. Isopure, our premium, high-protein, low-carb brand, grounded in purity, continues to do well, delivering double-digit like-for-like revenue growth in the year. This brand allows us to target an incremental consumer from Optimum Nutrition, with the consumer affluent and predominantly female, that values high quality and great-tasting solutions that they can incorporate into their daily nutrition regime. During 2025, we rolled out More of What Matters campaign with strong engagement rates, reaching more than 20 million consumers through our digital channels, educating consumers on how to integrate Isopure into their daily routines with influencers such as celebrity, Tiffani Thiessen, sharing simple baking hacks, highlighting the mixability into things like sauces and soups.
Our partnership with top Bollywood celebrity, Rashmika Mandanna, has helped deliver a reach of over 50 million+ for the brand in India. We've been expanding our distribution of Isopure across Food, Drug, Mass, and online retailers, elevating display execution and shelf placement, targeting aisles outside of performance nutrition to capture a broader consumer set. I'm pleased to see continued good growth in our core brand metrics, with double-digit growth in ACV, TDP, and household penetration. Innovation continues to be a core focus across our portfolio, and we launched several products under the Isopure brand, including protein water, stick packs, colostrum plus, and collagen peptides in the UK. Moving to our second growth platform of Health & Nutrition, which comprises nutritional premix solutions and flavors, and focuses on priority high-growth end-use markets of active lifestyle nutrition, functional beverages, and vitamin, mineral, and supplements.
This segment delivered a strong performance of 2025, delivering like-for-like revenue growth of 6.8%. This was driven by a 7.4% increase in volume and a 0.6% decrease in price. Total revenue increased by 11.5% as a result of 6.5% increase from the acquisitions of Flavor Producers and SweetMix, which were completed in April 2024 and August 2025, respectively, and the negative impact of the 53rd week in the prior year of 1.8%. We're pleased with the strong volume performance, which was driven by a good growth across both premix and flavors, underpinned by strong demand across our end-use markets. We saw particularly good growth in Europe and Asia. Pricing was slightly negative due to certain pass-through pricing of customers.
Health & Nutrition EBITDA was $115.8 million, up 16.7% constant currency. EBITDA margins were 18.4%, an increase of 80 basis points versus 2024 on a constant currency basis. Margin expansion was driven by the full year impact of Flavor Producers and strong volume growth from existing customers, somewhat offset by the impact of tariffs in the second half of the year. We have a strong global footprint in Health & Nutrition, with a range of technologies and solutions, targeting functional nutrition and end-use markets across a broad range of customers. We have deep customer relationships and co-development capabilities to help our customers win in their markets. We've the number two global position in customized premix solutions and have a strong position in natural and organic flavor systems.
operating in attractive end use markets, such as active nutrition, functional beverages, and vitamins, minerals, and supplements. We continue to invest in innovation, capacity, and new capabilities to ensure we have the best solutions to meet the growing demand for functional taste and macronutrient needs across a broad range of formats. During the year, we announced the acquisition of SweetMix and Scicore. SweetMix is a high-quality, Brazil-based nutritional premix and ingredient solutions business, which will allow continued expansion in the Latin America region. Scicore is a fully operational manufacturing facility in India, which provides us with our own in-market manufacturing for both performance nutrition and Health & Nutrition. In terms of capacity, we're substantially expanding our spray drying capabilities in the U.S., which will enable us to capture a larger opportunity in powdered flavor applications.
We have also approved plans to more than double our Asian nutritional premix capacity and are also expanding our capacity in Europe. Dairy nutrition combines our U.S. cheese and dairy proteins portfolios. This platform consists of a highly integrated manufacturing footprint with a high supply and operational interdependency, is also the route to market for our joint venture partner supply of whey and cheese ingredients. This business underpins our scale leadership position in dairy as a leading producer of whey protein isolate and American-style cheddar cheese in the U.S. We also hold exciting positions in dairy bioactives with strong demand, particularly for colostrum, targeting gut health and immunity trends. In 2025, dairy nutrition delivered like-for-like revenue growth of 5% in the period, driven by a 4.2% increase in volume and a 0.8% increase in pricing.
The increase in volume was across cheese and protein solutions, and the price increase was driven by strong high protein solutions category demand, somewhat offset by negative dairy market pricing in the second half of the year. We're seeing sustained demand for high-quality whey and non-whey protein solutions, driven by global trends in performance nutrition and everyday wellness. Our expertise in protein chemistry and our unique assets, combined with the ability to deliver consistent functionality and nutritional density, positions us as a partner of choice for customers seeking premium, science-led protein solutions. We saw good growth in existing and new customer wins in 2025. An example of this momentum includes our novel protein solutions, such as the OvenPro Series, targeting high-protein breakfast and other snacking usage occasions.
These solutions exemplify pleasure with purpose, indulgent products with protein content that taste good, meeting end consumer demand for great taste without compromise. Turning to whey and whey volatility, we're one of the largest suppliers and the largest buyer of whey protein isolate globally. We have a clear ongoing strategy on whey procurement. As consumer demand for protein continues to grow, which is driving growth in our priority brands, we also continue to see whey pricing hit record levels, driven by this strong demand. We have a lot of experience across the dairy complex. There's currently no way to effectively hedge whey protein. We have a robust program using all available levers to manage it. As you can imagine, there will always be a lag impact on margin as we implement consumer price increases and navigate this input volatility.
We have now contracted supply into early Q4, providing certainty on our cost base for 2026, with prudent assumptions for the remainder of the year. New global supply of high-end whey of approximately 15%-20% has started to come on stream and is expected to expand across 2026. We continue to engage with our suppliers for longer-term supply investment, and as mentioned previously, we're also investing in our own WPI capacity within our joint ventures, which will come on stream in early 2027. We continue to take decisive action to mitigate the impact as much as possible, and we're very thoughtful on this to ensure we do it in a measured way to maintain revenue growth and protect share.
In 2025, we increased prices in international markets in quarter two and in the U.S. in quarter four. We are currently implementing price increases globally for execution in quarter two, which is supported by promotional efficiency and product mix. To date, we have seen limited elasticity from price increases in 2025. We'll continue to monitor demand carefully, particularly as we move through the second round of price increases. We continue to review the possibility of further revenue growth management initiatives later in the year, depending on consumer reaction and the evolution of whey prices. In addition, we also carefully manage our cost base to ensure we're efficient and adjust our marketing investment appropriately to ensure we prioritize spend on brand-building initiatives. We will also be pricing across our protein solutions business in dairy nutrition.
Lastly, with innovation, we're looking to broaden our product mix from whey protein to include other protein sources, such as collagen, milk, and plant proteins, while also driving non-whey innovation, as you've seen with our energy platform. We made good progress on our group-wide transformation program during the year, which is focused on driving efficiencies across our new operating model and supporting the next phase of growth through three focus segments. The program is expected to generate annual cost savings of at least $60 million by 2027, and we are on track to deliver approximately 40% of savings in 2026. Of these savings, we expect to reinvest approximately 50% to drive growth across our performance nutrition, and Health & Nutrition segments. Significant progress has been made across four key pillars to give us confidence in delivering on the targets.
New operating model is now established, simplifying our structure with dairy, nutrition, and Health & Nutrition established as new dedicated segments, and a reorganized Glanbia Performance Nutrition Americas, injecting new capabilities into the business. The second pillar is to unlock efficiencies. We're centralizing and streamlining key activities and capabilities across procurement, engineering, planning, and quality. Driving operational efficiency through a mixture of automation and continuous improvement. We're also accelerating our procurement savings and leveraging our global manufacturing footprint for capacity. The third pillar is about accelerating our digital transformation. We've expedited the transformation of our back-office functions and continues to focus on automation and the implementation of AI and analytics to enable front office growth initiatives.
We are leveraging agentic AI across the group, which is supporting marketing campaigns and new product innovation and performance nutrition, and analyzing customer interactions in Health & Nutrition and dairy nutrition, providing us with both the intelligence and the infrastructure to drive growth and improve our efficiency. The final pillar is our ongoing portfolio evaluation. We're focused on simplifying our group structure and optimizing our overall margins. In 2025, we completed the sale of 2 non-core brands. We also completed the acquisition of SweetMix and Scicore, further expanding our global scale. As we outlined at our Capital Markets Day, we have a clear strategy in place to drive the next stage of growth. We've shown evidence of this model throughout 2025. Firstly, we're focused on driving Optimum Nutrition globally and growing our portfolio of lifestyle brands.
Optimum Nutrition delivered double-digit, like-for-like revenue growth in the second half of 2025. We continue to see strong momentum for the brand. We're ambitious to scale our Health & Nutrition segment as a leading solutions partner in our end-use markets. The acquisitions we've made and a commitment to capacity expansions we've outlined are core to this growth strategy. We are focused on optimizing dairy nutrition to maximize profits across our scale dairy operations while growing our protein solutions and bioactives business. We continue to expand internationally, leveraging our scale and global supply chain footprint. Lastly, investing in innovation to stay at the forefront of our growing categories is vital to us. The savings from our transformation program will allow us to continue reinvesting in innovation.
Delivery against each of these requires focus and execution excellence, enabled by our group-wide transformation program, our teams, talents, and culture, as well as our strong financial discipline. With that, I will hand over to Mark to take you through the financials.
Thanks to you, good morning to everyone on the call. 2025 group revenue was $3.95 billion, up 2.3% on a constant currency basis. At the group level, volumes were up 3.7%, driven by a good performance across all three divisions and a particular strong demand for our protein brands and ingredient solutions. Price was up 0.5%, driven primarily by positive dairy market pricing and positive pricing in performance nutrition. The 53rd week in the 2024 comparison negatively impacted revenues by 2%, and the net impact of acquisitions and disposals added 0.1% to group revenues as a result of the acquisition of SweetMix, offset by the disposals of SlimFast and Body & Fit.
2025 Group EBITDA pre-exceptional charges was $499.1 million, down 9.4% constant currency, primarily as a result of higher whey input costs impacting performance nutrition EBITDA, somewhat offset by strong EBITDA growth in Health & Nutrition in the year. GPN EBITDA was down 23.2%, H&N EBITDA was up 16.7%, DN EBITDA was up 1.7%. Group EBITDA margin was 12.6%, compared to 14.4% in the prior year. GPN EBITDA margins were 13%, down 380 basis points constant currency. In Health & Nutrition, we saw good progression on EBITDA margins to 18.4%, an increase of 80 basis points constant currency on the prior year.
Adjusted earnings per share for the year is $1.3493, down 3.4% constant currency on the prior year, ahead of the previously guided range of $1.30-$1.33. The group generated operating cash flow of just over $454 million, with a strong operating cash flow conversion of 91%, well ahead of our 80% target. Return on Capital Employed for the year was 11.3%, in line with our target range of 10%-13%. Cash flow generation was strong in 2025, with operating cash flow of just over $454 million. Operating cash conversion was 91%, compared to 88% in the prior year. Operating cash flow was enhanced by another year of disciplined working capital management.
Net working capital balances at year-end were broadly in line with prior year, and net working capital outflows for the year amounted to $11 million. Free cash flow for the year was $360 million, compared to $403 million in the prior year. At year-end, the group's net debt position was $526 million, compared to $436 million at the prior year-end. The closing net debt balance represented a net debt to Adjusted EBITDA ratio of 1.08x. Interest cover in 2025 was 13.7x. Both metrics are well within the group's financing covenants. The group has $1.4 billion in committed debt facilities, with a weighted average maturity of 2.7 years, with no facility due for renewal prior to late 2027.
Now let me turn to our capital allocation framework. Of the $437 billion deployed in 2025, we returned the majority of this capital to shareholders. In respect of dividends, the group returned EUR 102.5 million to shareholders during 2025, related to the final 2024 dividend and the interim 2025 dividend. Today, we announced that we are increasing the 2025 final dividend by 10%, so that the total dividend for 2025 will be EUR 0.4287 per share, representing a payout ratio of 35.9% of adjusted earnings per share, which is within our updated target payout range of 30%-40%. As we stated at our recent Capital Markets Day, the group is committed to a progressive dividend policy.
The group also returned EUR 197 million to shareholders via share buyback programs during 2025, acquiring and canceling 15 million shares at an average price of EUR 13.10 per share. The board has authorized a further EUR 100 million share buyback program for 2026. We are launching an initial EUR 50 million tranche of this today. In 2025, the group spent just over $51 million on strategic CapEx, with investments in ongoing capacity enhancements, business integrations, and IT investments to drive further efficiencies. The second half of 2025, we acquired SweetMix, a Brazil-based nutritional premix and ingredient solutions business, for an initial consideration of $41 million that enabled Health & Nutrition to continue to expand in Latin America.
Post-year-end, we completed the acquisition of Scicore, a manufacturing facility in India, providing in-market manufacturing for both PN and H&N for consideration of approximately $16 million. We will continue to look for organic and acquisition opportunities to scale our health and nutrition business, supported by our strong balance sheet and financing facilities. The group incurred exceptional charges after tax of just over $100 million during the year. These primarily related to the group-wide transformation program and losses on disposals of non-core brands. The multi-year transformation program was announced in late 2024 to drive efficiencies across the group's new operating model and to support the next phase of growth. In 2025, costs of this program amounted to $55 million, which were primarily people-related costs and advisory fees associated with outsourcing certain back-office functions and establishing the new Health & Nutrition and dairy nutrition businesses.
The program is on track to deliver $60 billion of annual savings during 2027, of which 40% are expected to be achieved by the end of 2026. Total cost of the program is expected to be $100 billion. The non-core brands, SlimFast and Body & Fit, were divested during the year, and we have recognized the loss of disposal of these businesses of $45.7 million in the current year. We've also taken a non-cash impairment charge of $16.5 billion related to the LevlUp direct-to-consumer retail business. As part of the decision to exit our dedicated European D2C retail strategy, and following the sale of the Body & Fit business, we are exiting the LevlUp D2C retail business as it no longer aligns with our strategy.
Net finance costs were $29.4 million, up approximately $2.6 billion compared to prior year, due to the acquisition of Flavor Producers in 2024. The average interest rate for the year was 4.2%, compared to 4.6% in 2024. The effective tax rate for the year was 15%, down from 16% in the prior year. For 2026, we expect the group's effective tax rate to be between 14% and 16%. The joint venture performance increased by $11 million versus prior year, primarily related to improved dairy market dynamics, including the implementation of the US Federal Milk Marketing Orders program from June 1st.
For 2026, capital expenditure, both strategic and sustaining, is expected to be between $100 billion and $110 billion, which includes initial spend related to the expansion of our Health & Nutrition facilities in Asia, U.S., and Europe, as Hugh has referenced earlier. These projects, which are expected to be substantially completed by the end of 2026, will have a total investment of approximately $40 billion and will enhance our ability to service customers in growing end markets. We are ambitious for growth, and we outlined our medium-term growth algorithm at our Capital Markets Day in November. Over the medium term, we are targeting 5%-7% annual organic revenue growth in performance nutrition and 4%-6% annual organic revenue growth in Health & Nutrition.
We expect to grow earnings ahead of revenue in PN and H&N, supported by our transformation program that will deliver $60 billion in savings annually by 2027. EBITDA margins in PN are expected to improve by 250 basis points by 2028, and EBITDA margins in H&N are expected to be in the range of 17%-19%. Dairy Nutrition EBITDA is expected to be in a range of $150 million-$160 million. From a group perspective, over the medium term, we are targeting annual earnings per share growth of 7%-11%, with 85% cash conversion, and we will continue to invest for growth and returns, targeting a dividend payout ratio between 30% and 40%. Our 2026 outlook is aligned with these medium-term targets.
Performance nutrition, like-for-like organic revenue growth, excluding dispositions, is expected to be between 5% and 7% in 2026 and will be pricing led. As we enter 2026, we continue to see strong demand for our protein products, and we are currently implementing price increases, which will be effective in Q2 to offset whey inflation. Volume trends have remained broadly resilient following prior year pricing actions, and we will continue to monitor these trends and demand responses closely as the year progresses. As whey input costs are expected to remain elevated this year, we will continue to assess the need for further revenue growth management actions in the second half of the year.
We continue to utilize all levers within our revenue growth management playbook, including disciplined pricing actions, promotional efficiency, and product mix management, allowing us to manage the cost environment while maintaining competitiveness and supporting the long-term health of our brands. We have very good visibility in our cost base this year, as we have contracted whey supply needs into early Q4, and we have made prudent assumptions on whey costs for the remainder of the year. New global whey supply of 15%-20% has started to come on stream, and we expect this to continue through 2026, albeit strong demand is taking up this supply. We expect to see EBITDA margin progression and performance nutrition in 2026 as a result of price increases, the sale of non-core brands, and our group-wide transformation program.
Progression is expected to be second half weighted as a result of the phasing of price increases and timing of marketing investments. Revenue and Health & Nutrition is expected to grow between 4% and 6% and will be volume led across both premix and flavor solutions businesses, with strong growth expected across our core end use markets of active nutrition, functional beverages, and vitamins and supplements. H&N EBITDA margins are expected to be in line with our medium-term guidance of 17%-19%. We continue to expect profitability growth across Dairy Nutrition and the group's U.S. joint venture. In Dairy Nutrition, we expect EBITDA to be in line with our medium-term guidance of $150 billion-$160 billion, with continued strong demand for whey protein.
Our U.S. joint venture will see profit after tax growth, given the full year impact of the U.S. Federal Milk Marketing Order, which was implemented on June 2025. We expect to deliver adjusted constant currency earnings per share growth in the range of 7%-11% in line with our medium-term guidance. We also expect operating cash conversion to be over 85% and return on capital employed to be in the range of 10%-13%. With that, I will hand it back to Hugh.
Our purpose is better nutrition. We're ambitious for growth. We're operating in exciting, high-growth categories with leading brands and ingredients driven by consumer megatrends. We have transformed our business, sharpening our focus to capture growth in our primary engines of performance nutrition and Health & Nutrition. Finally, we believe we have the right people, the right capabilities, the right portfolio, and balance sheet firepower to deliver on our growth algorithm and drive strong shareholder return. Now I'd like to hand over to the operator for questions.
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to our first question. One moment, please. Our first question today comes from the line of Patrick Higgins from Goodbody. Please go ahead.
Thank you. Morning, everyone. My first question is just on whey costs. A very clear commentary there, in terms of how you've hedged and your outlook. Maybe just to ask a little bit more color. At the Q3 point, I think you said you hedged for H1 marginally ahead of H2 2025 levels. You know, given the level of hedging you have in place now for this year, how should we think about, you know, that year-on-year impact for your whey cost bill for 2026 versus 2025? I guess the second question around this is just, you know, you flagged more new supply coming on stream, as we speak today. What is your base case assumption in terms of whey prices over the course of the next year?
Like, are you still anticipating a normalization or has that changed just given how strong demand has been over the last kind of year or so? And then my last question, if I can, I can sneak it in, is just around, you know, innovation for GPN. Clearly, it dialed up and kind of took more of a focus at your CMD in November. Maybe you could just talk us through the successes of some of the recent launches in H2 and some of the plans for the year ahead.
Thanks, Patty. I'll answer the cost question and Hugh will talk about innovation. Yeah, look, we've been managing our whey fairly closely, as you can imagine. That's why we are procured now to Q4. We've been layering in that procurement since last summer, frankly, as you sort of look at what we're doing for this year. Costs continue to be elevated. There's obviously a 90 and an 80 element to whey, and those have 80 been rising a bit more recently. I would say 90, a bit more stable, but certainly have continued to elevate as the year has gone on. When we look at year-over-year, we'd expect to see double-digit increase in costs of whey versus the prior year.
That, of course, will feed into the pricing conversation, as you can imagine as well. In terms of your question on new whey supply coming on stream, as I said, right now, it's been taken up in terms of the strong demand we're seeing for protein in all different formats. Clearly, we're benefiting from this in our dairy nutrition business and our performance nutrition business. Certainly right now, that whey supply has been taken up. As we look to 2026, I don't think we expect to see any significant change in terms of significant reduction in whey prices. We've assumed they'll stay at an elevated rate for the year in terms of our overall guidance to you.
Yeah. Thanks, Mark. Morning, Patrick, how are you? Apologies to all, I've been fighting a bit of a cold, which you might hear in my voice. Yeah, just to add actually to what Mark said on whey at a more strategic level, we see it in dairy nutrition. Demand is exceptionally strong at the moment multiple formats, and we're seeing the benefit of that in dairy and nutrition. You know, clearly, new supply is coming, and I can assure you that every dairy company out there is figuring out how to make more WPC and WPI given these prices. Fundamentally, it's driven by demand. I think you're gonna see all categories price increase over the course of 2026, and figuring out the impact that may or may not have.
The fundamentals remain very strong for demand of whey proteins. If you look at innovation, Patrick, what I'd say is what we shared with you in our at our Capital Markets, really, it was only coming online in quarter four and into this year. You know, we spoke to you about we're moving into blends of whey and collagen, targeting hydration and recovery, Crunchie in the US, Clear Whey in Europe. You know, good start there, very early. Lot of new flavor variants of creatine. We just launched our new creatine gummies, actually, on the TikTok shop in the US. Be interesting to see how that does. New 40-gram shake that we presented to you that's just launched. Amino Energy Stick Packs, and we just launched a new Amped pre-workout as well in January in the US.
A lot of activity, but very early to say. Obviously a key focus for us in Optimum Nutrition as we extend usage occasions. Lastly, just to say, you know, we are very focused on value to the consumer, so we've launched 10 lot of new opening price points, whether it be the sachets or 10 serve or 14 serve, and we continue to invest and support those new pack sizes to support consumer.
Okay, thank you.
Thank you. Your next question today comes from the line of David Xu from Morgan Stanley. Please go ahead.
Morning, Hugh and Mark. Just two questions from my side. Just to go back to your comments on the performance nutrition margin for this year, you pointed out we should expect some margin progression. Now there's obviously the 50 basis points net benefit to margin in 2026 from the disposals, which you had previously flagged. Should we expect margin progression beyond that, or is this only gonna be driven by that? That's my first question. Then my second is on the club channel. Can you just give us some more color here? I see there was a noticeable acceleration in like for likes in the second half of your, Food, Drug, Mass, and club sort of segments.
There's obviously the lapping of the club private label issues from summer of 2024, are sales in the club channel specifically now above levels prior to these issues? I think any and all color on the club channel would be appreciated. Thank you.
Hi, David. I'll take the margin question. He will update you on the club channel. A number of moving pieces, as you can imagine, as we look to margin in 2026. We are confident in getting margin progression in 2026. You're correct, we'd expect to see a 50 basis point improvement from the dispositions. In a full year, actually, that will be 80 basis points. We've got some dyssynergies as we enter the year that are impacting that as well. Of course, the big thing for us this year, as we see costs increase, we also have a lot of pricing coming through. We'll have double-digit pricing coming through in quarter two.
As you know, there can be a lag as pricing catches up with increases in whey costs, so we'll see that move as we go through the year. That will have a negative impact. A positive impact then will be the transformation savings. We said we get $60 billion by 2027, 40% of that will come in in 2026, and about half of that would hit the bottom line, quite a bit of that in PN. That will help us in terms of mitigating some of the lag on the pricing side. In the first half, you'd expect to see some more marketing investment relative to the year, as we normally do that, so it'll probably be second half weighted.
Overall, when you pull this together, I'd expect about a 50 basis point progression as we work through the year here, second half weighted.
Thanks, Mark. Hi, David. Morning. you know, I suppose the first thing I'd say is very happy with performance in Optimum Nutrition, and Isopure with double-digit growth in half two last year, particularly. you know, a reminder that we're an omni-channel business, so we're focused across all our channels of distribution, so I wouldn't pick out one in particular. you know, our Food, Drug, Mass, that is very strong. Category is growing very well. We're growing above category with both our brands. look, the club channel will always have puts and takes, just given the nature of products that go in and out as part of their tests and as part of kind of their innovation focus.
From our perspective, we're confident in our revenue guide for the year, particularly driven by Optimum Nutrition and Isopure.
Thanks very much.
Thank you. Your next question comes from the line of Alex Sloane from Barclays. Please go ahead.
Yeah, hi. Morning, all. A few questions from my side, if that's okay. I mean firstly, on Health & Nutrition, a very strong organic performance in quarter four, and really notably ahead of, you know, quite a lot of larger, you know, B2B ingredient peers. Can you give a bit more color in terms of, you know, what you think your weighted sort of end market growth was against that organic delivery in Q4? I guess what I'm trying to get at is, you know, is this outperformance really driven by, you know, structural mix of categories? Do you see kind of growth being sustainable in 2026? Secondly, on just to come back to whey, thanks for all the color already, but just a couple of questions.
Firstly, I guess, have you seen, you know, the broader peer set take similar pricing that you put through in November in the US so that your kind of relative price points are unchanged. Secondly, you know, thinking a bit longer term, so you're not assuming that whey costs come down or whey prices come down in 2026 because of the strong demand. Regarding the sort of 250 basis point improvement target out to 2028, are you embedding a normalization in whey prices in that assumption, or can most of that be driven by, you know, organic means? Thank you.
Morning, Alex, how are you? Yeah, look, very pleased with Health & Nutrition performance. As you said, a strong Q4 after a strong Q3. I suppose, you know, we highlighted this in our Capital Markets. We're targeting three end-use segments: active nutrition, functional beverage, and vitamin and supplements. They're all doing well for us. You know, we're seeing the same benefits in Health & Nutrition in terms of the end consumer we target that we're seeing in performance nutrition. I think that's the first thing I'd say. Second is that we're a focused and agile business as well. You know, we'll be smaller than a lot of the peers you referenced, but we're very focused on those segments. We invest in deep customer relationships. Good to see continued progress in international. Very positive there.
You know, we're also then leveraging cross-sell opportunities across the broader group, which is an opportunity for us as well. Clearly, Mark called out as well, we're investing in capacity expansions in Asia, Europe, and the U.S., which is a positive as well. As we laid out in our Capital Markets, we're ambitious to scale this business.
In terms of your question on whey, in terms of the 250 basis points, Alex, I would say that we are expecting that we'll have a normalization or a stabilization of cost versus pricing at some point here as we get through the three years, because this year, clearly, there's still some catch-up and lag, as I spoke to. You know, at some point, this should normalize. I'm not necessarily expecting a significant reduction given how sort of popular protein is, and we expect to see that in the medium term. Now, of course, I also have significant transformation work going on, which I know will give me margin improvement as well.
We're still confident in the 250 basis points over the period, but we are assuming that we get to a point where it has some stabilization of cost increases and pricing.
Lastly, just on your question, Alex, on whey and competition. Look, I think I'm comfortable in saying that everybody is going to have to move on price and are moving in price given the whey price inflation we've seen over the last 24 months. We saw first in international, we would have moved in quarter two. We saw a little bit of elasticity for a quarter until all the competition moved. Now, in fact, in international markets, some of our competition are moving ahead of us, and in the US as well, we're starting to see competition move, just given the scale of these prices.
As Mark said, we're not planning for a stabilization away at this point until we see what happens demand and what happens elasticity and what happens additional volume supply. Yes, we are seeing the market move.
That's very helpful. Thank you.
Thank you. Your next question comes from the line of Matthew Abraham from Berenberg. Please go ahead.
Morning, all. My question. First, on the Optimum Nutrition, just wondering if you could provide a view as to how you see the volume outlook for Optimum Nutrition in FY 2026, just relative to the positive volume momentum that brand reflected in the second half of the year. Just one more question in reference to some of the color you've provided on whey costs, that higher, but longer dynamic you've outlined. Can you just provide a bit of detail as to what impact you're seeing that have on the breadth of brands that compete with you, and if that's having a more adverse impact on some of the smaller, not vertically integrated brands, on shelves? Thank you.
Matthew, the line wasn't great there. I think I got the first question, which is just continued ON volume momentum into 2027. You know, clearly, we're very happy with performance in half 2 last year. The year started well for the brand. We can see that in consumption numbers as well. We'll be pricing in quarter 2. That's in train now as well. You know, figuring out the potential level of elasticity versus the level of price, et cetera, is just always a hard one to call. We've seen limited elasticity to date in the price increase in November in the U.S., and we worked through any small elasticity we saw in international earlier in 2025. Overall positive.
What I'd say is, look, our revenue guidance for PN is across the entire portfolio, so we would be ambitious for ON to be a little bit higher than that. Overall, positive as we go into 2026. Look, you can see it in the category data as well. Category growth is accelerating. Powders. We spoke at our capital markets on how powders are mainstream and the different consumer benefits, you know, mixability, higher protein content, versatility, so not just price, but affordability is actually. You know, these are very affordable, even post-price increase on a cost per serve versus other formats of high protein products. It's a great question in a way, you know, look, we are effectively vertically integrated.
You know, we have a dairy business where we've great insights on the protein markets and protein solutions. We manufacture our own powders. That gives us probably, you know, we have good foresight on how the markets are moving. You know, like the rest of the industry, we won't always get it right, but we will have good foresight earlier than a lot of competitors. I would think the smaller competitors, if they weren't locked into some of these prices or if they weren't locked into supply, would struggle to get supply and would struggle with pricing. I don't, I don't know anything for fact there, but just to say that it is likely if they're working through co-mans and they weren't bought forward, they could struggle.
Okay, I'll pass it on. Thank you.
Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone and wait for your name to be announced. We will now go to our next question. Our next question comes from the line of Damian McNeela from Deutsche Numis. Please go ahead.
Hi. Morning, gents. Thanks for taking the questions. First one is just on the indicated CapEx increase, and can you just clarify that the increase is going towards H&N and that the planned expansion will complete this year, i.e., you'll be able to sort of start driving that factory growth or factories growth from next year? Second question is on online revenue momentum. It looked like you delivered pretty strong growth in the year, just over 10%. Can you sort of provide what are the key sort of market drivers behind that, and whether they're sort of we should expect that to continue through 2026? Just one last one, just on marketing.
Are you in a position to sort of quantify what the step up year on year is likely to be, in 2026, please?
Hey, Damian. I'll take the CapEx question. We're a little bit ahead. You probably know most of our CMD guidance. We said 80-100, CMD are a bit ahead of that. The reason for that, frankly, is the strength we're seeing in the Health & Nutrition business. We're just, the volume numbers are strong. We expect to see that sustained quarter by quarter into 2026. As a result, we do require increased capacity. To your question, most of that will be done by the end of 2026. We should be having production in 2027 in terms of our Chinese and U.S. and European expansion. Most of that $40 billion will be spent by the end of 2026, based on our current plans.
I'll pass over to Hugh.
Maybe start with the marketing first one. Good morning, Damian. Look, one of the things we are, we have Mark laid it out, we're pulling all levers, as you can well imagine, across the business, given the current inflation environment on whey, particularly. You know, that would include marketing spend as per last year, but also our transformation project, our cost base, our mix, our revenue mix. In terms of marketing spend, though, it'll be mid-to-high single digits. It'll be higher than last year, but all of that increased spend will go behind the Optimum Nutrition brands. In terms of key e-commerce, obviously, I said it earlier on, we're an omni-channel business, so we're pushing for growth across all our channels that we compete in.
An online channel is always a key channel for us, as we can engage so well with the consumer there in terms of information, in terms of content, et cetera. We continue to expand that. You can expect as well. You know, that's where a lot of our innovation will go online first, because we can move quickest on it. You could, you know, we would absolutely be ambitious for continued growth in that channel.
Okay. Thanks so much. Very clear. Thank you.
Thank you. Your next question comes from the line of Cathal Kenny from Davy. Please go ahead.
Good morning. Thanks for taking my questions. Two quick questions. Firstly, Hugh, just on the affordability piece within PN, obviously, you mentioned 10 server, 14 server and sticks. Any early evidence on the performance of those formats? That's my first question. My second question just relates to the guide for PN. I'm assuming that you're within that, the assumption is a high degree of elasticity on the second price increase of the price increase in Q2. There are my two questions. Thank you.
Hi, Cathal. Good morning. Yeah, a little bit early on, some of the sachets are just really launching, but our 10 server, 14 server we launched last year, I'm really pleased with performance there. In fact, what we're seeing there is it's bringing in a lot of new consumers, particularly the 10 serve online. Affordability, hitting the right price point, sub $20 price point in some instances, has been important. We continue to do that, and we see that in the U.S. and internationally as well. In terms of the guide for PN, yeah, look, we debate this a lot, you know, we discussed this a bit in our quarter 3 results as well, you know, particularly internationally, when we price increased, we saw a little bit of elasticity for a quarter.
It's hard to call. We have built elasticity into our assumptions. In saying that, demand for whey protein continues to be exceptionally strong. Our categories are going very strong. Our brands are outperforming the categories in this space as well. Calling what the elasticity will be is a difficult thing to do. As you can imagine, we're very thoughtful in this and careful as we move through the year because, you know, our goal here is to continue to drive the growth of the brands and ahead of category. There's lots of debates internally, but simply put, yes, you can assume we have elasticity built into our assumptions for the year. We'll keep you updated as we go through the year, how we're thinking about that.
Thanks. Just a quick follow-up on creatine, obviously, you called it out in terms of very good growth. Is there much opportunity to scale that further? I'm thinking beyond North America. Secondly, just in terms of the pricing environment around creatine, could we get a little bit of color on that, please?
Yeah, I think I can be quite clear. When we're talking about price increases, actually, we're just talking about price increases on our protein category.
Yeah
... which is about 65%-70% of the business. We won't be price increasing on our energy or creatine products. 2, I'd actually say, Cathal, the creatine growth is global. It's across all of our markets. It was a significant double-digit growth in 2025 over 2024. We've launched a lot of new innovation, different format sizes, different flavors. Continues to do well, and the teams will continue to be, you know, they're the two, that kind of energy, creatine and protein are what's going well for us.
Thank you.
Thank you. Your next question comes from the line of David Wu from Morgan Stanley. Please go ahead.
Hi, Jane. Sorry, I just had some follow-up questions. I appreciate that this is not a Dairy 101, but just going back to whey, supply is obviously gonna react to price, right? I mean, can you give us an idea how quickly producers can react to adding new WPC-80 or 90 capacity from brownfield conversions? Does this all need to be greenfields, given that, I guess, there's not been much investment into cheese over the last few years. The other question is on marketing, and here, I promise this is a genuinely serious question, but can you confirm if Optimum Nutrition renewed its partnership with England Rugby they previously had, or is it only Ireland Rugby that it now has as, like, a main rugby team in the Six Nations? Thanks.
I'd have to kind of start with that last question, given the weekend that's winner, David. We sponsor a number of we sponsor Marcus Smith, the English rugby player, but not the English rugby team. Yes, we do sponsor the Irish rugby team and a number of athletes within there as well. Like, you know what? That's, we could give you a thesis on this, I know it wouldn't be fully accurate in that, 'cause there's so many variants in this. The first thing I would say is we know from our own dairy plants that every dairy business is looking at efficiency initiatives to increase the output of high-end whey proteins, whether it be 80 or 90.
I think a lot of dairy plants can switch between the two, so depending on economics, they can switch between one and WPI and WPC-80. I think if it was an add-on, the best example I'd give you is probably our own facility, where we've approved the CapEx at late next year, and that'll be in place for early 2027. Probably from approval of CapEx implementation, kind of that probably 15-month period to. That will be leveraging existing whey stream and concentrating it up to 90%. You know, if you were to build a new facility, it would obviously take that little bit longer, probably 2+ years . I suspect everybody is running the rules over whether they build new facilities or not.
The challenge always will be in the cheese whey markets as to the cheese market is effectively flat. Can you sell the cheese? Then cheese prices. I think the difference now, what you'd probably see is businesses, dairy businesses start looking at, can they produce whey casein rather than just whey cheese, so not produce cheese at all, which is a different plant configuration. Given the demand we're seeing and the prices, the returns will work. There'll be a lot of work going on at the moment around at these prices, with this demand. Even if prices were to drop, my sense is the dairy industry will be quite confident the demand will remain strong.
Even if there were a drop back a little, you know, 20%, 30% for a period, they will, that will still be enough premium there to incentivize new capacity over the next number of years.
Thank you.
Thank you. That concludes the Q&A. I will now hand the call back to Hugh McGuire for closing remarks.
Thank you, operator. Look, just to briefly close, just to reinforce our conviction, from the team here, that Glanbia remains well positioned for growth. We're moving at pace, as we laid out at our Capital Markets Day. Just to thank you for your time, and look forward to connecting with you all individually over the next few days.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.