Synlait Milk Ltd. · NZX:SML
Synlait Milk — Select Equities Conference 2017
22 slides from Synlait Milk's conference presentation, Oct 27, 2017
Slide 1: Doing Business in China
For personal use only DOING BUSINESS IN CHINA 27 OCTOBER 2017
Slide 2: Disclaimer
DISCLAIMER For personal use only - This presentation is intended to constitute a summary of certain and which are subject to change without notice. Actual results, - Forward looking statements in this presentation are unaudited and information about Synlait Milk Limited (Synlait). It should be read
Slide 3: FY17 Highlights
FY17 HIGHLIGHTS For personal use only DEBT DOWN NET DEBT FY16 $214m ADDITIONAL SYNLAIT CAPITAL RAISED ADDED TO $97.6m NET DEBT FY17 S&P/NZX $83m 50 INDEX PROFIT UP NPAT FY16 NZDC ACQUIRED TO DOUBLE CANNING CAPACITY $34.4m NPAT FY17 5 YEAR $8.9m $38.2m NEW HOPE NUTRITIONALS INFANT FORMULA SUPPLY IN P
Slide 4: Strategic Update 2017
For personal use only STRATEGIC UPDATE 2017 STRATEGIC UPDATE I Synlait Milk Limited 2017
Slide 5: We Are a Growth Company
For personal use only WE ARE A GROWTH SYNLAIT IS A B2B OVER THE PAST 11 YEARS MANUFACTURING WE HAVE GROWN FROM COMPANY FOCUSSED START-UP TO ANNUAL COMPANY ON MAKING THE MOST PRODUCTION VOLUMES OF FROM MILK. 140,000 METRIC TONNES (MT) 2006 2017 STRATEGIC UPDATE I Synlait Milk Limited 2017 I Page 5
Slide 6: Synlait Adds Value from Farm to Consumer
SYNLAIT ADDS VALUE FROM FARM TO CONSUMER For personal use only RESEARCH + CATEGORY DEVELOPMENT - Select categories and markets - Design products - Innovate production and processes DIFFERENTIATED MILK SUPPLY MANUFACTURING CONSUMER PACKAGING - Contract supply of milk, and other high EXCELLENCE - Seco
Slide 7: Registering Brands in China
REGISTERING BRANDS IN CHINA For personal use only INFANT FORMULA IS THE MOST REGULATED FOOD PRODUCT IN THE WORLD - IT IS THE ONLY FOOD PROVIDED TO SOME INFANTS IN THEIR FIRST MONTHS OF LIFE. - CFDA registration of The a2 Milk Company’s infant formula was granted in September 2017. - Because the manu
Slide 8: Increasing Our Capacity and Reducing Risk
INCREASING OUR CAPACITY AND REDUCING RISK For personal use only GIVEN STRONG CURRENT AND EXPECTED CUSTOMER DEMAND, WE CHOSE TO ACQUIRE 100% OF THE SHARES IN THE NEW ZEALAND DAIRY COMPANY LIMITED (NZDC). NZDC WAS CONSTRUCTING AN INFANT FORMULA-CAPABLE BLENDING AND CONSUMER PACKAGING OPERATION IN AUCK
Slide 9: Unlocking Infant Formula Dryer Capacity
UNLOCKING INFANT FORMULA DRYER CAPACITY For personal use only WETMIX THREE HIGH SPECIFICATION KITCHENS SPRAY DRYERS 80,000 MT 80,000 MT CONTRACTED FARMS MILK SOLIDS MAX. CAPACITY MAX. CAPACITY CONSUMER PACKAGING APPROX 200 (FY17) 65.0m kgMS (FY17) 87,000 MT TOTAL CAPACITY BASE POWDER 40,000MT - Nove
Slide 10: Improving a World Class Team
IMPROVING A WORLD CLASS TEAM For personal use only - Our team has grown from 436 to 500 in FY17 - Two additional shifts in the consumer packaging facility - Technical roles for the quality testing laboratory - New roles to support Integrated Business Planning (IBP) - Lifting the experience profile o
Slide 11: Our Financial Results FY17
For personal use only OUR FINANCIAL RESULTS FY17 STRATEGIC UPDATE I Synlait Milk Limited 2017
Slide 12: Financial Success
FINANCIAL SUCCESS For personal use only EBIT INCREASED TO NET DEBT DECREASED FROM $65.8m $214m NPAT UP $38.2m 11% TOTAL SHAREHOLDER RETURNS 34.1% (FY16: $61.1m) $83m TO GEARING DOWN FROM LEVERAGE FROM 2.6X DOWN TO 0.9X(1) 46.8% ROCE OF 13.9% (FY16: 13.5%)(2) TO 18.0% (3) Notes: (1) Leverage = net de
Slide 13: Higher Volumes Drive Revenue Growth
HIGHER VOLUMES DRIVE REVENUE GROWTH For personal use only - Revenue at $759.0m was up 39% on last year’s $546.9m, driven by increased sales volumes and improved MT SALES VOLUME BY PRODUCT CATEGORY dairy commodity prices. 18,776 - Total sales volume at 141,393 MT was 21% above last year’s 116,402 MT,
Slide 14: Profit Growth
PROFIT GROWTH For personal use only $MILLIONS - Net profit after tax was $38.2m, up from $34.4m in FY16. 10.0 (6.0) 38.2 (0.2) - Increased infant sales volumes 34.4 drove gross profit growth of $10.0m (before tax). - $6.0m was reinvested into business development and planning capabilities for future
Slide 15: Gross Profit per MT Marginally Lower
GROSS PROFIT PER MT MARGINALLY LOWER For personal use only $MILLIONS GROSS PROFIT - Continued growth in earnings driven by 110.4 100.4 improved volumes. Gross profit was up GROSS PROFIT 10% to $110.4m. - Our overall gross profit per MT at $781 was $82 per MT down on last year. $110.4m 51.0 64.2 55.5
Slide 16: Reinvesting Margin into Business Development
REINVESTING MARGIN INTO BUSINESS DEVELOPMENT For personal use only $MILLIONS OVERHEADS - In total our overhead expenses for FY17 at $44.8m were up $6.0m (1.9) 44.8 on FY16 ($38.8m). (0.3) (0.8) (3.0) - Our strong focus on quality, 38.8 strategic initiatives and Research and Category Development Qual
Slide 17: Continued Cash Flow Growth
CONTINUED CASH FLOW GROWTH For personal use only $MILLIONS OPERATING CASH FLOW 115.2 - Operating cash flow increased by 104.4 $10.8m from FY16, to $115.2m in FY17. OPERATING CASH FLOW 58.7 - Operating cash flow was greater than EBITDA given rising milk prices, relative to the advance rates paid. $11
Slide 18: Debt Reduction
DEBT REDUCTION For personal use only $MILLIONS NET DEBT - Net debt has decreased from $213.9m in FY16 to $82.6m. (213.9) 115.2 (12.1) 96.1 - The capital raise of $97.6m completed in October 2016 and (33.9) strong operating cash flows of $115.2m were the main drivers. (33.1) - These factors vastly ou
Slide 19: Our Expectations and Future
For personal use only OUR EXPECTATIONS AND FUTURE STRATEGIC UPDATE I Synlait Milk Limited 2017
Slide 20: Going Forward
GOING FORWARD For personal use only - We see considerable opportunities to solidify our current ingredient and infant formula positions and to enter new categories. - To date our strategy has been exclusively business to business. In future, we may consider the establishment of branded positions, wh
Slide 21: Expectations of Growth
EXPECTATIONS OF GROWTH For personal use only MT SALES - CANNED INFANT FORMULA - We expect Chinese infant formula demand to continue to grow, particularly with the relaxing of the one child policy. - The regulatory change targeting rationalisation of brands may boost 30,000-35,000 demand in the secon
Slide 22: Media and Investor Contacts
For personal use only MEDIA INVESTORS Dan Walraven, Communications Manager Casey Blatch, Strategic Finance Manager +64 373 3069 +64 3 373 3091 Daniel.Walraven@synlait.com Casey.Blatch@synlait.com