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Operator: Good day, and thank you for standing by. Welcome to the Glanbia 2025 Full Year Results Presentation. [Operator Instructions] 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.
Liam Hennigan: 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.
Hugh McGuire: Thank you, Liam. Good morning, everybody, and 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, and 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 3 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 $499.1 million, representing a decrease of 9.4% and EBITDA margins of 12.6% in representing a decrease of 170 basis points on a constant currency basis. With margin expansion in Health & Nutrition, offset by our contraction in margin and performance attrition 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, and 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 and we made significant progress on our group-wide transformation program, with our 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 noncore 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 are 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 noncore brands, which is 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 2 and in the U.S. in quarter 4 to offset record whey inflation. During the year, we also implemented some tactical price reductions and 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 noncore 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 impact of noncore brands, driven by volume and pricing growth in the Optimum Nutrition brand, particularly in China, India, Oceania and the U.K. 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% Performance Nutrition revenue, excluding noncore 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 channels 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%, and 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, and we'll continue to increase our retail distribution with distribution gains for ON across retailers in Europe and Asia Pacific and 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 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 to give them their edge. The launch features McLaren Formula 1 star Lando Norris, Rugby International's Dan Sheehan from Ireland and Mark Smith from England and U.S. Women's NBA star Cameron Brink. Early results show that the optimal 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, help the 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 continue 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 creating 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 #1 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 testing 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 Bolly with Celebrity Rashmika and Mandana, has helped deliver a reach of over 50 million plus 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 and collagen peptides in the U.K. 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 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 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 in 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 hold the #2 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 macro nutrient 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 premium 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 and 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 is 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 Oven Pro 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 Isopure globally, and 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 dairy complex, but there's currently no way to effectively hedge whey protein, but 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 quarter 4, 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% to 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 2 and in the U.S. in quarter 4, and we are currently implementing price increases globally for execution in quarter 2, which is supported by promotional efficiency and product mix. To date, we've seen limited elasticity from price increases in 2025, but 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. And 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 at 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 3 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 4 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 the reorganized performance of Nutrition in Americas, injecting new capabilities into the business. The second pillar is to unlock efficiencies, and we're centralizing and streamlining key activities and capabilities across procurement, engineering, planning and quality and 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, and 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 attrition 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. And in 2025, we completed the sale of 2 noncore brands, and 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, and 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, and 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 and 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. And lastly, investing in innovation to stay at the forefront of our growing categories is vital to us and the savings from our transformation program will allow us to continue to reinvest in innovation. Delivery against each of these requires focus on execution excellence enabled by our group-wide transformation program, our teams, talent and culture as well as our strong financial discipline. And with that, I will hand over to Mark to take you through the financials.
Mark Garvey: Thanks, Hugh, and 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 good performance across all 3 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. 53rd week in the 2024 comparison negatively impacted revenues by 2% and the net impact of acquisitions and disposals added 0.1% of 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% in 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. PN EBITDA was down 23.2%. H&N EBITDA was up 16.7% and DN EBITDA was up 1.7%. Group EBITDA margin was 12.6% compared to 14.4% in the prior year. PN EBITDA margins were 13%, down 380 basis points constant currency. And in Health & Nutrition, we saw good progression in EBITDA margin to 18.4%, an increase of 80 basis points constant currency on the prior year. Adjusted earnings per share for the year was $1.3493 down 2.4% constant currency on the prior year and ahead of the previously guided range of $1.30 to $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% to 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 million 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 '25 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% to 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. In addition, the Board has authorized a further EUR 100 million share buyback program for 2026 and we are launching an initial EUR 50 million tranche of this today. In 2025, the group spent just over $51 million on strategic capital expenditure with investments in ongoing capacity enhancements, business integrations and IT investments to drive further efficiencies. In 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, 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 & 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 a group-wide transformation program and losses on disposals of noncore brands. The multiyear 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, cost of this program amounted to $55 million, which are 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 million 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 million. The noncore 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 noncash impairment charge of $16.5 million related to the level of 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 level of D2C retail business as it no longer aligns with our strategy. Net finance costs were $29.4 million, up approximately $2.6 million 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 '24. The effective tax rate for the year was 15%, down from 16% in the prior year. And for 2026, we expect the group's effective tax rate to be between 14% and 16%. Joint venture performance increased by $11 million versus prior year, primarily related to improved dairy market dynamics, including the implementation of the U.S. Federal Milk Marketing Orders program from June 1. For 2026, capital expenditure, both strategic and sustaining is expected to be between $100 million and $110 million, 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 '26, will have a total investment of approximately $40 million 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% to 7% annual organic revenue growth in Performance Nutrition and 4% to 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 million of 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% to 19%. Dairy Nutrition EBITDA is expected to be in the range of $150 million to $160 million. From a group perspective, over the medium term, we are targeting annual earnings per share growth of 7% to 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 '26, 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 balance from 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 and whey costs for the remainder of the year. New global whey supply of 15% to 20% have started to come onstream, 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 noncore brands and our group-wide observation program. Progression is expected to be second half weighted as a result of the phasing of price increases and timing of marketing investments. Revenue in 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% to 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 million to $160 million with continued strong demand for whey protein. And 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% to 11%, in line with our medium-term guidance. We also expect operating cash conversion to be over 85%, and returning capital employed to be in the range of 10% to 13%. And with that, I will hand it back to Hugh.
Hugh McGuire: Our purpose is better nutrition, and 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. And 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. And now I'd like to hand over to the operator for questions.
Operator: [Operator Instructions] Our first question today comes from the line of Patrick Higgins from Goodbody.
Patrick Higgins: My first question is just on whey cost, a very clear commentary there. And in terms of how you've hedged on your outlook. But maybe just to ask a little bit more color. So at the Q3 point, I think you said you hedged for H1 marginally ahead of H2 '25 levels. given the level of hedging you have in place now for this year, how should we think about year-on-year impact for your whey cost bill for '26 versus '25? And I guess the second question around this is just 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 sneak it in, is just around innovation for GPN clearly dialed up and kind of took more of a focus at your CMD in November, maybe you could just talk us through the success of some of the recent launches in H2 and some of the plans for the year ahead.
Mark Garvey: Thanks, Patty. Just, I'll answer the cost question, and he will talk innovation. Yes, look, we've been managing our whey fairly closely, as you can imagine. That's why we are procured out 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 to 80 element to whey, and those have 80 have 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. So when we look at year-on-year, we'd expect to see double-digit increase in cost of whey versus the prior year. And that, of course, will feed into the pricing conversation, as you can imagine as well. And 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 as in our Dairy Nutrition business and our Performance Nutrition business. But certainly, right now, that supply has been taken up. So as we look to '26, I don't think we expect to see any significant change in terms of significant reduction in whey prices. So we've assumed they'll stay at an elevated rate for the year in terms of our overall guidance to you.
Hugh McGuire: Yes. Thanks, Mark. Apologies to all of you, fighting a bit of a cold that you might hear in my voice. Yes, 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 across multiple formats. And we're seeing the benefit of that in Dairy Nutrition. So 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. But fundamentally, it's driven by demand. I think you're going to see all categories price increase over the course of 2026 and figuring out the impact that may or may not have. But the fundamentals remain very strong for demand of whey protein. If you look at innovation, Patrick, what I'd say is what we shared with you in our -- at our Capital Markets was only coming online at quarter 4 and into this year. So we spoke to you about we're moving into blends of whey and collagen, targeting hydration and recovery so [indiscernible] The U.S. [ Clearway ] In Europe, good start there, very early. A lot of new flavor, variants of creatine. We just launched our new creatine gummies actually in the TikTok shop in the U.S. I'd be interested to see how that does. The foreground shape that we present here has just launched amino energy stick packs and we just launched new AMP preworkout as well in January in the U.S. So a lot of activity, but very early to say. But obviously, a key focus for us in Optimum Nutrition as we extend usage occasion. And lastly, just to say we are very focused on value to the consumer. So, we've launched 10 -- a lot of new opening price points, whether it be the sachets or 10-server, 14-server, and we continue to invest and support those new pack sizes to support consumer.
Operator: Your next question today comes from the line of David Roux from Morgan Stanley.
David Roux: Just 2 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 '26 from the disposals, which you had previously flagged. So should we expect margin progression beyond that? Or is this only going to be driven by that? That's my first question. And 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. But our sales in the club channel specifically now above levels prior to these issues. I think any and or color on the club channel would be appreciated.
Mark Garvey: David, I'll take the margin question, and Hugh will update you on the club channel. A number of moving pieces, as you can imagine, as we look to margin in 2026, and we are confident in getting margin progression in '26. You're correct, we'll expect to see a 50 basis point improvement from the dispositions. In the full year, actually, that will be 80 basis points, but we've got some dissynergies as we enter the year that are impacting that as well. But of course, the big thing for us this year as we see costs increase, we also have the pricing coming through. So we'll have double-digit pricing coming through in quarter 2. As you know, there can be a lag as pricing catches up with increases in whey cost. So we'll see that move as we go through the year. So that will have a negative impact. A positive impact then will be the transformation savings. We said we get $60 million by '27%. 40% of that will come in, in '26 and about half of that will hit the bottom line, quite a bit of that in PN. So that will help us in terms of mitigating some of the lag on the pricing side. And in the first half, you'd expect to see some more marketing investment relative to the year as we normally do that, sort of how will be second half weighted. So overall, when you put this together, I'd expect about a 50 basis point progression as we work through the year here, second half weighted.
Hugh McGuire: Thanks, Mark. I suppose the first thing I'd say is very happy with performance in Optimum Nutrition, and I secure with double-digit growth in half 2 last year, particularly in -- and a reminder that we're an omnichannel business are focused across all our channels of distribution. And so I wouldn't pick out one in particular. Our Food, Drug, Mass data is very strong categories growing very well. We're growing in both categories, both our brands. So 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 test and as part of kind of their innovation focus. But from our perspective, we're confident in our revenue guide for the year, particularly driven by Optimum Nutrition and Isopure.
Operator: Your next question comes from the line of Alex Sloane from Barclays.
Alexander Sloane: A few questions from my side, if that's okay. I mean firstly, on Health & Nutrition, very strong organic performance in quarter 4 and really notably ahead of quite a lot of larger B2B ingredient peers. Can you give a bit more color in terms of 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 is this outperformance really driven by structural mix of categories? And do you see kind of growth being sustainable in 2026? And secondly, on just to come back to whey, thanks for all the color already, just a couple of questions. Firstly, I guess, have you seen the broader peer set take similar pricing that you put through in November in the U.S. so that your kind of relative price points are unchanged. And secondly, thinking a bit longer term, so you're not assuming that whey costs come down or whey prices come down in '26 because of the strong demand regarding the sort of 250 basis point improvement target out to '28, are you embedding a normalization in whey prices in that assumption? Or can most of that be driven by organic means?
Hugh McGuire: Alex, very pleased with Health & Nutrition performance, as you said, a strong quarter 4 after a strong quarter 3, I suppose, we highlighted this in our Capital Markets again, we're targeting 3 end-use segments, Active Nutrition Functional Beverage and Vitamin Supplements and they're all doing well for us. We're seeing the same benefits in Health & Nutrition in terms of the end consumer we target that we're seeing in Performance Nutrition. So I think that's the first thing I'd say. Second is that we're focused and agile business as well. It would 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. So very positive there. And we're also then leveraging cross-sell opportunities across the broader group, which is an opportunity for us as well. And Clearly, Mark called out as well and as did I, we're investing in capacity expansions in Asia, Europe and the U.S., which is a positive as well. So as we laid out in our Capital Markets, we are ambitious to scale this business.
Mark Garvey: And 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 3 years because this year, clearly, there's still some catch-up on lag, as I spoke to. At some point, this should normalize and not necessarily expecting a significant reduction given how sort of popular protein is, and we expect to see that in the medium term. Of course, I also have significant transformation work going on, which I know will give me margin improvement as well. So we're still confident in the 250 basis points over the period, but we are assuming that we get to a point where we have some stabilization of cost increases on pricing.
Hugh McGuire: And lastly, just on your question, Alex, on whey and competition. 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 it first in international, we would have moved in quarter 2. We saw a little bit of elasticity for a quarter until all the competition moved. And now in fact, in international markets, some of our competition are moving ahead of us. And in the U.S. as well, we're starting to see competition move. Just given the scale of these prices. As Mark said, we're not planning for stabilization in a way at this point until we see what happens to demand and what happens to elasticity and what happens additional volume supply. So yes, we are seeing the market move.
Operator: Your next question comes from the line of Matthew Abraham from Berenberg.
Matthew Abraham: 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 '26 just relative to the positive volume momentum that, that brand reflected in the second half of the year? And then just one more question, in reference to some of the color you provided on whey costs are higher, the 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?
Hugh McGuire: Matthew, the line wasn't great there, but I think I got the first question, which is just continued ON volume momentum into 2027. Clearly, we're very happy with performance in half 2 last year. The year started well for the brand. You can see that consumption numbers as well, we'll be pricing in quarter 2. That's in train now as well. So figuring out the potential level of elasticity versus the level of price, et cetera, it's just all a hard one to call. We've seen limited elasticity to date and the price increase in November in the U.S., and we've been -- we worked through any small elasticity we saw in international earlier in 2025. So 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. So overall, positive as we go into 2026. And look, you can see it in the category data as well. Category growth is accelerated in powders. We spoke at our capital markets on how powders are mainstream and the different consumer benefits, mixability, higher protein content, versatility. So not just price but affordability is actually -- 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 on whey. Look, we are effectively vertically integrated. We have a dairy business where we create insights on the protein markets and protein solutions, we manufacture on our powder. So that gives us probably we have good foresight on how the markets are moving. Like the rest of the industry, we want to always get it right, but we are -- 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, will struggle to get supply and will struggle with pricing. But I don't know anything for fact there, but just to say that it is likely if they're working to [indiscernible] And they weren't brought forward, they could struggle.
Operator: Our next question comes from the line of Damian McNeela from Deutsche Numis.
Damian McNeela: 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 the sort of -- we should expect that to continue through '26? And then 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?
Mark Garvey: Damian, I'll take the CapEx question. We're a little bit ahead, you probably noticed of our CMD guidance. We said $80 million to $100 million in CMD, We're a bit ahead of that. And 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 sustain quarter-by-quarter into 2026. So as a result, we do require increased capacity. So to your question, most of that will be done by the end of 2026. So we should be having production in 2027 in terms of our Chinese and U.S. and European expansion. So we should all -- most of that [ $40 billion ] will be spent by the end of 2026 based on our current plans. I'll pass it over to Hugh for...
Hugh McGuire: Yes, maybe start with the marketing first. Damian. Yes. So look, one of the things we are -- Mark laid it out, we're pulling all levers, as you can well imagine, across the business given the current inflationary environment on whey particularly. So that will include marketing spend as per last year, but also our transformation project or cost base, our mix -- our revenue mix. In terms of marketing spend, though, to be mid- to high single digits, it will be higher than last year, but all of that increased spend will go behind the Optimum Nutrition brand. In terms of e-commerce, obviously, as I said it earlier on, we're an omnichannel business so we're pushing for growth across all our channels that we compete in. But e-commerce channel as always, 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. So we continue to expand that. You can expect as well -- that's where a lot of our innovation will go online first because we can move quickest on it. So you could -- we would absolutely be ambitious for continued growth in that channel.
Operator: Your next question comes from the line of Cathal Kenny from Davy.
Cathal Kenny: Two quick questions. Firstly, Hugh, just on the affordability piece within PN. Obviously, you mentioned 10-server, 14-server and stick any early evidence on the performance of those formats? That's my first question. And 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 and the price increase in Q2. They are my 2 questions.
Mark Garvey: Yes, A little bit early in some the sachets were just really launching. But our 10-serve, 14 serve we launched last year and really pleased with the performance there. And in fact, what we're seeing there is it's bringing in a lot of new consumers, particularly the 10-serve online. So affordability hitting the right price point, it's a $20 price point in some instances has been important. So we continue to do that. And we see that in the U.S. and internationally as well. In terms of the guide for PN, yes, we debate this a lot, and we discussed this a bit in our quarter 3 results as well, particularly internationally, when we price increase. 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. So 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 our goal here is to continue to start to go to the brands and ahead of category. So 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.
Cathal Kenny: Just a quick follow-up on creatine, obviously, you called it out in terms of very good growth. One is, is there much opportunity to scale that further and I think beyond North America? And secondly, just in terms of the pricing environment you're on creatine, could we get a little bit of color on that, please?
Mark Garvey: Yes, 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. It's all driven, which is a fair 65%, 70% for business. We won't be price increasing on our energy or creatine products. Two, I'd actually say, the creatine growth is low. 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, but continues to do well, and the teams will continue to be -- they are the 2 that kind of energy creatine and protein or what's going well for us.
Operator: Your next question comes from the line of David Roux from Morgan Stanley.
David Roux: Some follow-up questions. I appreciate that is another dairy 101. But just going back to whey, supply is obviously going to 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? Or does this all need to be greenfields given that, I guess, there's not been much investment into cheese over the last few years? And then the other question is on marketing. And Hugh, I promise this is a generally 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 like a main rugby team in the 6 nations?
Hugh McGuire: I have to kind of start with that last question given the weekend, it's winner David. We sponsor a number of -- we sponsor Marcus Smith, the English rugby player but not the English rugby team. And yes, we do sponsor the Irish rugby team and a number of athletes within there as well. So the -- yes, like you know what, we could give you a thesis on this, and I know it wouldn't be fully accurate because there's so many variants in this. So 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 2. So depending on economics, they can switch between 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 will be in place for early '27. So probably from approval of CapEx implementation kind of that probably a 15-month period, and that will be leveraging existing whey stream and they're concentrating upto 90%. If you were to build a new facility, I would obviously take that a little bit longer probably 2 years plus. 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 the cheese market is effectively flat. So can you sell the cheese because that's -- and then cheese prices. I think the difference now what you'll probably see is businesses -- dairy businesses start looking at kind of produce whey casing rather than just whey cheese. So not produce cheese at all, which is a different plant configuration. But given the demand we're seeing in the prices, the returns -- the returns will work. So there'll be a lot of work going on at the moment around at these prices. And with this demand, even if prices were to drop, my sense is the dairy industry be quite confident the demand will remain strong. So even if there were a drop back a little 20%, 30% for a period, they will -- that will still be enough premium there to incentivize new capacity over the next number of years.
Operator: Thank you. That concludes the Q&A. I will now hand the call back to Hugh McGuire for closing remarks.
Hugh McGuire: Thank you, operator. Look, just to briefly close, just 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. And just thank you for your time and look forward to connecting with you all individually over the next few days.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.