Synlait Milk Ltd. · NZX:SML
Synlait Milk — Investor Presentation (October 2023)
30 slides from Synlait Milk's investor presentation, Oct 30, 2023
Slide 1: Pokeno Institutional Investor Site Tour
For personal use only POKENO INSTITUTIONAL INVESTOR SITE TOUR 30 October 2023
Slide 2: Synlait's Evolution
SYNLAIT’S EVOLUTION Grant Watson Chief Executive Officer For personal use only
Slide 3: To remain competitive Synlait's strategy needed to evolve
TO REMAIN COMPETITIVE SYNLAIT’S STRATEGY NEEDED TO EVOLVE … For personal use only FROM (PRE-2022) TO (2022 ONWARDS POST STRATEGY REFRESH) • Concentration risk • Diversified channels, categories and geographies • Risk appetite • Business stability • Capacity and supply led • Customer and demand led •
Slide 4: But the macro environment has changed
… BUT THE MACRO ENVIRONMENT HAS CHANGED For personal use only COVID-19 China birth Substantial capital Global supply Tight labour market rates declining investment in China-based chain challenges manufacturing assets CO2 Inflationary New Zealand Extreme weather events Geopolitical pressures CO2 shor
Slide 5: So, how has Synlait evolved?
SO, HOW HAS SYNLAIT EVOLVED? For personal use only MILK SUPPLY PEOPLE PROFITABILITY Milk processors Staff numbers Customer demand Peak cow and milk Shift numbers Net Profit After Tax (NPAT) Synlait Farmer Leadership Team POKENO INSTITUTIONAL INVESTOR SITE TOUR
Slide 6: Milk Supply
MILK SUPPLY Milk production is flat, while milk processors are rising. New Zealand milk production volume Processor share of New Zealand milk pool For personal use only Milk YoY 100% production production (m’ kgMS) change (%) 90% 2 20 80% 70% 1.5 15 60% 1 10 50% 40% .5 5 30% 20% 0 0 10% -.5 -5 0% 03
Slide 7: Milk Supply: peak milk and cow, how do we compete?
MILK SUPPLY Peak milk and cow have also arrived. How do we compete? 1 COMPETITIVE, TRANSPARENT FARMGATE MILK PRICE Total milking cows and production per cow For personal use only 2 FAVOURABLE Total milking Production ADVANCE RATE cows (million per cow AND NO SHARES heads) (kgMS/cow) 5.5 450 8 PURPOS
Slide 8: Farmer Leadership Team
MILK SUPPLY Synlait established a Farmer Leadership Team of eight farmer suppliers who are a conduit to the company. For personal use only Phill Everest Adam Williamson Dan Schat Gary Michael Co-Chair South Island South Island South Island Henry Bolt Rebecca Hubbard Susie Woodward Will Burrett South
Slide 9: People: headcount and macro impacts
PEOPLE Macro impacts and customer demand changes significantly impact planning and production cycles. For personal use only Total headcount trend Where headcount growth has come from 1200 200 900 150 600 100 300 50 0 0 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 22 FY 23 North Island South Island Total E
Slide 10: People: customer demand and shift numbers
PEOPLE Customer demand changes also have a significant impact on national shift numbers. • New shifts take a minimum of nine months to recruit (three months), reach a competent level without supervision (three months), For personal use only and support the delivery of full attainment to plan (three
Slide 11: Profitability
PROFITABILITY Synlait built capacity ahead of the curve, allowing capacity and supply to underpin strategic assumptions. Advanced Nutrition volumes (FY 18 forecast vs FY 23 actuals) For personal use only Dryers required 5 Pokeno site acquisition 4 3 2 1 Net Profit After Tax Advanced Nutrition volume
Slide 12: Synlait Strategy FY24–FY28
SYNLAIT STRATEGY FY 24 – FY 28 Our Purpose – Doing Milk Differently For A Healthier World AMBITION RIGHT TO PLAY CHANNELS CATEGORIES For personal use only TO FY 28 OUR STRONG FOUNDATIONS OUR BUSINESS TYPES OUR PRODUCTS Farmer Net Customer Net Staff Engagement Food Safety Highly Utilised, Advanced Nu
Slide 13: Advanced Nutrition and Foodservice Market Insights
ADVANCED NUTRITION AND FOODSERVICE MARKET INSIGHTS For personal use only Naiche Nogueira Abby Ye Director of Advanced Nutrition President of China & Director of Foodservice
Slide 14: Advanced Nutrition
ADVANCED NUTRITION Naiche Nogueira Director of Advanced Nutrition For personal use only
Slide 15: Advanced Nutrition Strategy FY24–FY28
ADVANCED NUTRITION STRATEGY FY24 – FY28 Our Purpose – Doing Milk Differently For A Healthier World AMBITION RIGHT TO PLAY CUSTOMERS CATEGORIES For personal use only TO FY28 OUR STRONG FOUNDATIONS OUR FOCUS PARTNERS OUR FOCUS PRODUCTS Sales Volumes Gross Margin Customer Net Food Safety Highly Utilise
Slide 16: Advanced Nutrition – Life Stage Nutrition
ADVANCED NUTRITION – LIFE STAGE NUTRITION For personal use only ADVANCED INGREDIENTS EARLY LIFE NUTRITION ADULT NUTRITION Lactoferrin and Maternal Infant Children Active Sports Healthy Clinical specialty ingredients nutrition nutrition nutrition nutrition nutrition ageing nutrition POKENO INSTITUTIO
Slide 17: Early Life Nutrition – APAC
EARLY LIFE NUTRITION – APAC APAC total market value: US $31 B (CAGR 1.3%) Japan For personal use only Infant: $0.5 B (-2%) LOW CATEGORY GROWTH South Korea Infant: $0.2 B (1%) China Philippines Infant: $23 B (0.5%) Infant: $0.9 B (2%) Vietnam PREMIUMISATION Infant: $2 B (5%) Indonesia Infant: $2 B (2
Slide 18: Early Life Nutrition – China
EARLY LIFE NUTRITION – CHINA Largest global market at 49% of global share For personal use only Birth rate Marriage and birth rates Marriage rate Domestic vs import (millions) (millions) 20 14 12 16 10 12 8 Domestic International Domestic International 40% 60% 57% 43% 8 6 4 4 2 0 0 2014 2015 2016 20
Slide 19: Adult Nutrition
ADULT NUTRITION APAC total market value: US $13 B (CAGR 8%) Japan For personal use only Adult: $2 B (7%) AGEING POPULATION South Korea Adult: $1 B (8%) China Philippines Adult: $7 B (7%) Adult: $0.3 B (8%) PREVENTATIVE Vietnam Indonesia NUTRITION Adult: $0.3 B (8%) Adult: $0.7 B (8%) Thailand Adult:
Slide 20: Nutrition for Wellness
NUTRITION FOR WELLNESS For personal use only Fortified Healthy powders PRODUCT MATURITY ageing Whole milk Basic Broad Targeted Formulated Complete Gut health Weight loss and calcium fortification support support support support Dairy and plant-based milk sources POKENO INSTITUTIONAL INVESTOR SITE TO
Slide 21: Why is adult nutrition Synlait's next growth opportunity?
WHY IS ADULT NUTRITION SYNLAIT’S NEXT GROWTH OPPORTUNITY? For personal use only Demographic change Increasing nutrition Leverages dairy and Synergises with Accelerated and health awareness plant-based capability infant capability awareness and trust POKENO INSTITUTIONAL INVESTOR SITE TOUR
Slide 22: Foodservice
FOODSERVICE Abby Ye President of China & Director of Foodservice For personal use only
Slide 23: Foodservice Strategy FY24–FY28
FOODSERVICE STRATEGY FY24 – FY28 Our Purpose – Doing Milk Differently For A Healthier World AMBITION RIGHT TO PLAY CHANNELS CATEGORIES For personal use only TO FY28 OUR STRONG FOUNDATIONS OUR FOCUS BUSINESS TYPES OUR FOCUS PRODUCTS Sales Volumes Gross Margin Customer Net Food Safety Highly Utilised,
Slide 24: Consumption Channels
CONSUMPTION CHANNELS For personal use only BAKERIES CAFES BEVERAGE CHAINS POKENO INSTITUTIONAL INVESTOR SITE TOUR
Slide 25: Why is foodservice cream Synlait's next growth opportunity?
WHY IS FOODSERVICE CREAM SYNLAIT’S NEXT GROWTH OPPORTUNITY? For personal use only From New Zealand Headed for Entering fast An emerging Potentially another plant South East Asia growing channels opportunity based opportunity POKENO INSTITUTIONAL INVESTOR SITE TOUR
Slide 26: The data speaks for itself
THE DATA SPEAKS FOR ITSELF NEW ZEALAND CREAM IMPORTS TO CHINA For personal use only • 39% of total import volume (cream) • 44% of total import value (cream) • $8.3 billion export market to China FAST GROWING CHANNELS • China bakery growth 9.9% • Beverage growth 13.4% EMERGING OPPORTUNITIES IN CHINA
Slide 27: China's cream market has significant potential
CHINA’S CREAM MARKET HAS SIGNIFICANT POTENTIAL China Import Statistics – Cream For personal use only 2022 Chinese cream New Zealand market: 250,000MT France United Kingdom Spain New Zealand accounts for Ireland 58% of all China’s cream imports 58% Netherlands Belgium Australia For comparison: Austra
Slide 28: Joyhana cream in market
JOYHANA CREAM IN MARKET West China – North China – Chengdu 成都 Beijing 北京 For personal use only South China – East China – Shenzhen/Guangzhou 深圳/广州 Shanghai 上海 POKENO INSTITUTIONAL INVESTOR SITE TOUR
Slide 29: Customer feedback
CUSTOMER FEEDBACK For personal use only “ The whipping rate of Joyhana is quite good, a good option for mousse cake. “ Looking forward for more creations from Joyhana cream! “ Joyhana cream goes very well with fruit taste. POKENO INSTITUTIONAL INVESTOR SITE TOUR
Slide 30: Questions
QUESTIONS Grant Watson Abby Ye Chief Executive Officer President of China & Director of Foodservice For personal use only Naiche Nogueira Director of Advanced Nutrition