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The Glanbia Story

GIC Conference Dublin 2007

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The Glanbia Story

Ireland a small domestic market export orientation

The food and drinks sector: • Largest net wealth generator in the Irish economy • Exporting 80% of output to over 120 countries • Exporting €7.5 billion worth of food and drink products • Equivalent to 35-40% of value added in manufacturing sector • Employing 230,000 people

Ireland – the food island

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The Glanbia Story

• Global dairy market dynamics shifting • Consumer mega trends (convenience, health and wellness) • Competitiveness in Ireland - high cost economy (energy costs + 80% since 2001-2006) - growth in retail concentration/buying power - ever increasing compliance/regulatory costs• EU and global dairy markets in transition after years of relative stability: - changing EU Policy - WTO trade liberalisation• Scale - increased scale at manufacturer/supplier level

Challenges and opportunities

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The Glanbia Story

Shifting market supply and demand dynamicsDairy demand: • Recent forecasts see global demand for dairy growing at 2.8% • OECD/FAPRI/USDA/EU all forecasting prices to rise significantly to 2017

Main growth factors are:• Population growth • Westernisation of eating habits & growing per capita GDP in emerging markets i.e. Asia• Favourable economic conditions - low interest rates, currency stability - low inflation despite rising oil prices• Purchasing power of oil producing countries• Increased demand for dairy ingredients/functional foods and infant formula • Increased demand in developed markets for convenience and health/wellness products • Consistent growth in cheese consumption in EU and USA • Drought in key producing countries i.e. Australia• High oil prices (double edged sword) v growth in demand for biofuels

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The Glanbia Story

Global milk supply will slow down in the next five years:

• NZ growth potential impacted by land prices/alternative land uses, costs etc• Australia growth subject to climatic limitations• EU production potentially capped until 2015, playing a reduced role in global trade• Ireland lowest cost milk producer in the EU with appetite for growth post abolition of quotas• USA supply strong with global impact • LATAM to remain strong regional player, but limited global impact• Eastern Europe/India, domestic growth will limit exports

Dairy supply

Glanbia well positioned to meet market challenges

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The Glanbia Story

World Dairy Demand Growth – CAGR Forecast 2.8%

0.6%

0.8%

3.3%12.8% 4.4%

4.5% 7.2% 2.1% 5.3%1.0% 4.0%

EU-25

North America

Latin Americ

aChina

Middle East /

N Africa

Russia /

Ukraine

India / Pakis

tan *

Japan / K

orea

SE Asia

Oceania

Sub Saharan Afric

a

Demand Volumes125

100

75

50

25

0

million tonnes milk equivalent

Source: ZMP Rabobank 2006* India/Pakistan formalized part of the market only

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The Glanbia Story

• Global Warming - impact on dairy output • GDP growth in oil exporting countries - increased dairy purchasing power • Growth of biofuels - driving up agricultural feedstock prices - milk price to feed ratio - alternate land use

Energy impact on dairy markets

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The Glanbia Story

Oil Production Oil Price

January 1990 – February 2005

OPEC: Crude oil output and price 1990 – 2005Output and Price growth since 2002 driving GDP

32,000

30,000

28,000

26,000

24,000

22,000

20,000

$50

$40

$30

$20

$10

$0

Invasion of Kuwait

Thou

sand

Bar

rels

per D

ay

90 92 94 96 98 00 02 0491 93 95 97 99 01 03 05

WTRG Economics 2005www.wtrg.com479-293-4081

Crude Oil Production (Mbbl/d)OPEC Countries

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The Glanbia Story

Dairy product imports of major oil exporters 1998 - 2005

0

100000

200000

300000

400000

500000

600000

700000

Cheese WMP Butter SMP

1998 1999 2000 2001 2002 2003 2004 2005

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The Glanbia Story

Growth of renewable energy alternatives

• US and EU commitment to develop - ecological - economic - geo-political• Policy / Regulatory• Other economic powers following suit

Biofuels: Energy security versus food security

Domestic Renewable energy sources

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The Glanbia Story

• USA and Brazil the world’s leading producers • US production growing rapidly – circa 8 billion gallons 2007 - maize corn based - benefits from agricultural support programmes - high import tariff protection• Brazil – current annual output 4.5 billion gallons - sugarcane based - major competitive advantage –v- maize corn - strong competition for alternative land uses - aspires to world export leadership

Bio-ethanol production

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The Glanbia Story

Corn the preferred US feedstock

The US corn crop, accounts for 40% of the global harvest and traditionally supplied 70% of world corn exports

• Biofuel will utilise 27% of US corn output in 2007 - 1.6billion gallons in 2000, up to 12 billion gallons in 2010

• 114 US ethanol bio-refineries in operation, 80 more under construction - concerns: ethanol energy balance and water requirement • 30% of the corn from ethanol production is recovered as distillers grains - this has limited use in animal feed

Rising corn prices will affect all food prices

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The Glanbia Story

• Growth of biofuels will impact on all food markets - policy guidelines will be underpinned by legislation • Fuel will compete with food for land use - higher land prices - higher feed stock prices• Inflationary impact on dairy and food prices• Will favour pastoral dairy farming• Climate change, if a reality, will have a dramatic sustained effect – dairy market volatility GDP growth will sustain strong demand growth• Medium term dairy supply / demand outlook is price positive but what impact on demand?

Biofuels outlook

Glanbia plc

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The Glanbia Story

• Origins in Irish dairy co-operative movement (early 1900’s) • Export history and experience - focus on international casein and fat filled powder markets - cheese acquisitions in UK and USA 1980 / 1990’s - USA restructuring – move to the west 1995

• 1997 – merger of Avonmore Foods plc and Waterford Foods plc

• 1999 – formation of Glanbia plc

About us

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The Glanbia Story

Glanbia plc 2007• Dairy-based food and nutritional ingredients Group

• Operations in Ireland, Europe, USA and China

• International Joint Ventures in the UK, USA and Nigeria

• Listed Irish and London Stock Exchanges (Symbol: GLB)

• Circa €900 million market capitalisation

• Free float 45%; Co-op ownership 55%

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The Glanbia Story

Key financials • Top line growth of 8% to €2.1 billion, including joint ventures

• Profit after tax pre exceptional up 9% to €66.4 million

• Adjusted EPS up 8% to 22.6 cent, in line with market expectations

• Dividends up by 5% to 5.79 cent per share

• Several milestones achieved including Seltzer acquisition and SWC opening

• International operations now represent almost 40% of revenue and profits

• 2007: expect strong first half performance & confident of good double digit growth for year

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The Glanbia Story

Vision and strategyTo be the most relevant player in international cheese, nutritional and dairy ingredients and selected consumer foods …

….through a focus on international scale, food technologies and growth markets

Our objectives are to:

• Sustain double digit earnings growth

• Diversify the Group’s earnings base to reduce volatility

• Allocate capital to a mix of higher growth opportunities

• Improve operating margins

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The Glanbia Story

• Global dairy market dynamics shifting

• Competitiveness - Ireland : high cost economy - growth in retail concentration / buying power

• Investment in increased productivity / automation

• Product diversification into high value dairy ingredients (whey, lactose, nutraceuticals)

• Increased investment in innovation : two innovation centres (Ireland & USA)

• Links to infant formula sector (Ireland largest European producer)

• Scale cheese production

• Encourage productivity model for services to industry (energy & other utilities) and long term Government support for innovation and biofuel industry

Issues, opportunities and Glanbia responses

Strategy based on cost reduction / restructuring and on developingscale with innovation / new product development

Business review

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The Glanbia Story

UKIreland

Germany

Nigeria

Brazil

Mexico

New Mexico

IdahoWisconsin& Chicago

Sales Office

Production Site

2007 global operations

California

Uruguay

China

TOTAL GROUP*

4,481employees

5,312milk suppliers

4.73 billionlitres of milk processed

370,000 tonnesof cheese produced

210,000 tonnesof food ingredients manufactured

* including joint ventures

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The Glanbia Story

JOINT VENTURES: €263 million revenue, €5.5 million operating profit

2006 Footprint [three divisions and international JV’s]

IRELAND INTERNATIONAL64% revenue 36% revenue

Consumer Foods

Agribusiness and Property

Food Ingredients and Nutritionals

28% revenue29% profits

14% revenue19% profits

58% revenue52% profits

• Excluding JVs, €1.85 billion revenue and €85.6 million operating profit

• Including JVs, €2.1 billion revenue and €91.1 million operating profit

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The Glanbia Story

Consumer Foods• Two different businesses

– dairy-based consumer foods– pigmeat processing

• Key segment is consumer foods

• Leading brands and market positions

• Emphasis on nutritious, fresh and natural

• Focus on innovation and organic development

• Market with good growth potential

Liquid milk and chilled foods: Branded liquid milk, dairy products, cheeses and fresh soupsPigmeat: Fresh pork and bacon products

28% of Group 2006 Revenue 29% of Group 2006 Operating Profit

IRELAND

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The Glanbia Story

Agribusiness and Property

Agribusiness

• Key link to Farmer supply base

• 61 locations nationally

• Good cash flow

Property

• Maximise value of Group assets

• Portfolio of >90 properties

• Good predictable medium term profits

Agribusiness: Feed milling, fertiliser, full range of farm inputs, Biofuels, & ‘CountryLife’ range Property: Maximising value of Group-wide property

14% of Group 2006 Revenue 19% of Group 2006 Operating Profit

IRELAND

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The Glanbia Story

Food Ingredients & Nutritionals

Food Ingredients: Cheese, butter, casein and whey proteinNutritional: Dairy-derived ingredients & Vitamins & minerals

58% of 2006 Group Revenue 52% of 2006 Group Operating Profit

Food Ingredients

• Two businesses – Ireland and USA

• Capital and energy intensive manufacturing

• Emphasis on efficiency, scale, relevance

• Ireland dominated by effects of EU MTR

• USA steady market, profitable growth

IRELAND and INTERNATIONAL

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The Glanbia Story

INTERNATIONAL

• Global business • Whey – a valuable source of sugar, proteins, minerals• Customised premixes – entered market in 2004 – large market in the USA; approximate value US$400 million pa – projected to grow 8 to 10% pa 2006 to 2011 (HSC report 2005)• Business-to-business revenue and relationships

• Growth business in a growth market / strong fit with Group strategy – science-based innovation and R&D underpinning the business• Strong organic, acquisitions and NPD opportunities• Good performance / current focus on integration of Seltzer, acquired 2006

Nutritionals

Strategy: to be a key global provider of nutritional ingredients and nutritional solutions…….building a scalable, sustainable business

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The Glanbia Story

International Joint Ventures

Three Joint Ventures located in the UK, USA and Nigeria

12.5% of 2006 Group Revenue 6% of 2006 Group Operating Profit

• Key element of growth strategy

• UK : Glanbia Cheese– 2007 annualised revenue

£110 million

• Nigeria : Nutricima– 2007 annualised revenue

US$100 million

• USA : Southwest Cheese– 2007 annualised revenue of

US$350 million

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The Glanbia Story

Where: Wales & NI

Partner: Leprino Foods

• No.1 Europe mozzarella cheese• Technology driven business• Key customer relationships• Growing market share

Glanbia Cheese UK

INTERNATIONAL

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The Glanbia Story

Where: Clovis New Mexico

Partner: Great South West Milk Agency

• US$190 million investment• Cheese and whey facility• 1.1 billion litres of milk• Full production by mid-2007 delivering

annualised sales of US$350 million• Ramp up ahead of plan

Southwest Cheese USA

INTERNATIONAL

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The Glanbia Story

Where: Lagos

Partner: PZ Cussons; 100 years in Nigeria

• US$25 million investment• 50:50 Joint Venture• Consumer foods with dairy focus• Population of 140 million• Strong sales growth• 2007 annualised sales US$100 million• Further US$35 million expansion planned

Nutricima Nigeria

INTERNATIONAL

Summary

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The Glanbia Story

Review • Ireland a small domestic economy strong export tradition / flexibility • Glanbia managing cost /competitive issues in local markets through productivity

and cost strategy• Constant tracking of global dairy dynamics • Opportunities - world milk production growing @ 1.75% pa

- world dairy demand forecast @ 2.8% pa - rising corn prices to drive all food and dairy prices

- growing demand for health and wellness products• Scale position developed in US cheese market• Developing Nutritionals business to meet growing market requirement

- Seltzer acquisition key / Asian expansion planned 2007/2008 • Outlook for sustained high growth

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The Glanbia Story