Synlait Milk Ltd. · NZX:SML
Synlait Milk — H1 FY2015 Earnings Presentation
19 slides from Synlait Milk's earnings presentation, Mar 30, 2015
Slide 1: Synlait Milk Interim Results 2015
synlait S CREATING VALUE Synlait Milk Interim Results 2015
Slide 2: Disclaimer
DISCLAIMER This interim results presentation dated 30 March 2015 provides additional comment on the media release and our interim report for the six months ended 31 January 2015 of the same date. As such, it should be read in conjunction with, and subject to, the explanations and views of future out
Slide 3: FY15 - Investing for Growth
FY 15 - INVESTING FOR GROWTH FY 15 is a year where Synlait is investing heavily to build capacity to meet our future demand growth. It is a year of building momentum. - Late in FY 14 we commissioned our new lactoferrin plant and blending & canning plant. In FY 15 we are focused on bringing both thes
Slide 4: Results Overview
RESULTS OVERVIEW Sales volume 43,000 MT | 2% Gross profit per MT* $623 | 24% Reported net loss after tax $(6.4) million | 153% *compared to full year FY2014 MT = Metric tonne © Synlait 2015 Revenue $197.5 million | 31% EBITDA $12.3 million | 50% Underlying net profit after tax $0.4 million | 97%
Slide 5: FY Performance to be Reflected in Two Halves
FY 15 PERFORMANCE TO BE REFLECTED IN TWO HALVES NZD ($million) 2015H1 2014 H1 Change Change 8.27 (7.99) (96.5)% © Synlait 2015
Slide 6: Underlying Earnings
UNDERLYING EARNINGS 2015 H1 2014 H1 Change NZD ($ 000) Actual Actual % Unrealised FX gains/losses not reflective of underlying performance. $6.5 million unrealised loss on Mitsui inventory financing facility, driven by rapid decline in USD rate. This loss unwinds into a natural hedge when the invent
Slide 7: Reported and Underlying Profit Bridge
REPORTED AND UNDERLYING PROFIT BRIDGE NZD ($ million) 15.0 12.1 (7.5) 7 a 1.3 (1.4) : ne 0.8 (6.8) (6.4) 6.8 04 (5.0) a (10.0) (15.0) FY14H1 Product Mix Payroll Depreciation Finance Other Unrealised FY15 H1 Unrealised FY15 H1 Cost FX Reported FX Underlying © Synlait 2015 7
Slide 8: Gross Profit per MT Performance
GROSS PROFIT PER MT PERFORMANCE - Gross profit at $623 per MT well down on last half year at $919 per MT. - Underlying gross profit per MT on our core ingredients business ahead of FY 14. Two key issues impacting the comparative performance between periods — 1. The FY14 half year included the one of
Slide 9: Gross Profit Growth Key to Success
$ (NZD) / MT GROSS PROFIT GROWTH KEY TO SUCCESS Gross Profit per MT (NZD) 1,000 ois 900 823 800 751 700 04 623 600 500 462 400 385 300 200 100 FY10 FY11 FY12 FY13 FY14 FY14 H1 FY15 H1 — Gross profit per MT expected to improve in second half as higher margin products are delivered. © Synlait 2015 9
Slide 10: Blending and Canning Facility
BLENDING AND CANNING FACILITY - Weare forecasting to manufacture and deliver in excess of 5,000 MT of fully finished infant formula in FY 15, with just under 1,200 MT delivered in the first half. - Year one performance on this plant will exceed our business case expectations by over 800 MT. - FY 16
Slide 11: Lactoferrin Facility
LACTOFERRIN FACILITY - Lactoferrin production and sales are behind expectations in the first half. - While we have contracted 7.5 MT of sales, only 1 MT was delivered in the first half due to a number of technical issues, which we are now satisfied have been effectively worked through and resolved.
Slide 12: Milk Supply and Production Up
MILK SUPPLY AND PRODUCTION UP 2015 H1 2014 H1 Change Actual Actual % Sales Volumes (MT) ‘net of sales © Synlait 2015 v
Slide 13: Milk Volumes
MILK VOLUMES 60.0 0.3 50.0 40.0 n S Mm = 30.0 s E 52.1 z 47.9 42.1 20.0 37.6 10.0 21.9 ane FY10 FY11 FY12 FY13 FY14 FY15 Forecast mContracted m= Other — Forecast 2015 milk volumes expected to be in line with budget, high volumes in first half being offset by declining volumes in second half of FY15.
Slide 14: Balance Sheet and Cashflow
BALANCE SHEET AND CASHFLOW - New Mitsui USD inventory financing facility ($73.0 million) and additional project loan drawdowns ($65.0 million) have increased gearing by 17% to 63% at the half year. - FY15 season started with a $7.00 kgMS milk price and initial advance rates of $4.50 kgMS. - Even tho
Slide 15: Net Working Capital
i Net Working Capital is current assets, less current liabilities after excluding derivatives 15
Slide 16: Growth Initiative Projects
GROWTH INITIATIVE PROJECTS Project Commission. NZD ($ million) Date Lactoferrin plant Apr 2014 22,500m? Drystore Apr 2014 Blending and Consumer Jul 2014 Packaging facility Dryer Three (D3) Aug 2015 Jul 2015 Admin and Lab (Admin) Sep 2016 (Lab) _ Total Growth Projects Opening Balance 12.2 11.4 10.0 1
Slide 17: Capital Structure Strategy
CAPITAL STRUCTURE STRATEGY - Working capital can be volatile and unpredictable due to: * commodity market pricing * significant seasonal movements in receivables and inventory * changing relationship between movements in milk price and related advance rates paid to farmers - Implementing Board appro
Slide 18: FY 15/16 Outlook - Industry
FY 15/16 OUTLOOK - INDUSTRY - International commodity prices expected to remain weak and fragile - Uncertain NZD:USD direction over next 12 months with significant variation in market forecasts - Production increases in Europe expected to continue as quotas come off - Demand from China and Russia co
Slide 19: FY 2015 Outlook - Synlait
FY 2015 OUTLOOK - SYNLAIT Continued focus on building our tier 1 multinational customer relationships to maximize utilisation of investments to deliver strong financial performance over time. - Completing build of Dryer 3, new administration, laboratory and technical development centre on time and w