Synlait Milk Ltd. · NZX:SML
Synlait Milk — FY2019 Earnings Presentation
34 slides from Synlait Milk's earnings presentation, Sep 12, 2019
Slide 1: Deliver. Invest. Clarify. Our Year in Review
OUR YEAR IN REVIEW INVEST. CLARIFY. DELIVER. SYNLAIT MILK LIMITED FULL YEAR REPORT 2019
Slide 2: Strategic Update
LEON CLEMENT CHIEF EXECUTIVE OFFICER UPDATE STRATEGIC S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 | PG 1
Slide 3: Our year in review
| PG 2 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 DELIVER. INVEST. CLARIFY Our year in review Delivering results Investing for the future Clarifying our direction • Revenue exceed $1 billion for the first time, • $18.9 million expansion to lactoferrin facility • Launched ou
Slide 4: Challenges we are working on
| PG 3 CHALLENGES WE ARE WORKING ON S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 Despite strong delivery no year is without its challenges • Uncertainly remains regarding land at Synlait Pokeno (further update on slide 14) • Uncertainty remains regarding SAMR registrations –
Slide 5: What makes us different
| PG 4 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 WHAT MAKES US DIFFERENT Our unique capabilities underpin our sustainable competitive advantage Established Building Pioneered an ability to Developed an integrated Navigated complex Built in quality testing Relentless focus
Slide 6: Our Strategy
OUR STRATEGY S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 | PG 5
Slide 7: Delivering against our growth strategy
| PG 6 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 DELIVERING AGAINST OUR GROWTH STRATEGY STRATEGY PROGRESSED DELIVERY ONTRACK STRATEGY DEVELOPING • Advanced liquid dairy packaging • 21% growth in consumer • Natural extension facility completed, servicing packaged infant for
Slide 8: Infant Nutrition
| PG 7 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 INFANT NUTRITION FY19 consumer packaged infant formula volumes of 42,907 MT up 21% on FY18 and in line with guidance range of 41,000 - 45,000 MT - Continued commitment to support strong partnership with The a2 Milk CompanyTM
Slide 9: Everyday Dairy
| PG 8 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 EVERYDAY DAIRY Advanced Liquid Dairy Packaging Facility commissioned and production of Food Stuffs South Island private label product range commenced - Performance behind expectations due to initial commissioning challenges
Slide 10: Delivering against our enabling strategy
| PG 9 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 DELIVERING AGAINST OUR ENABLING STRATEGY • Published Greenhouse Gas • Injury rate reduced 28% • Built three world class facilities (GHG) inventory • Launched programme to live • IWS generating impressive • Workplan towards 2
Slide 11: Net positive for the planet
| PG 10 NET POSITIVE FOR THE PLANET S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 Taking stock of our environmental footprint and implementing initiatives that reduce it Lead agriculture’s response to Minimise water usage and climate change eliminate water degradation • Comple
Slide 12: Build a healthier Synlait
| PG 11 BUILD A HEALTHIER SYNLAIT S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 By investing in our people we can create a legacy of leaders to help us transform our industry for the better Provide a safe work place Culture and capability Live our purpose Delivery of growth en
Slide 13: World class value chain
| PG 12 WORLD CLASS VALUE CHAIN S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 As demand for our products increases we are continuing to build reputational currency by investing in what matters Manufacturing excellence and Safe food and market access Transparency Healthier farm
Slide 14: Today's announcement: Dry Store 4
| PG 13 TODAY’S ANNOUNCEMENT: DRY STORE 4 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 An additional warehouse facility will create significant supply chain efficiencies As part of our strategy to build a world class value chain, Synlait today announced that it is building an
Slide 15: Pokeno update
| PG 14 POKENO UPDATE S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 Timeline of the process to date and next steps Process to date Today’s update February 2018 • Date for the oral hearing has been set: Monday 21 October Synlait announced the conditional purchase of 28 hectares
Slide 16: Our Financial Results
OUR NIGEL GREENWOOD CHIEF FINANCIAL OFFICER RESULTS FINANCIAL S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 | PG 15
Slide 17: Results at a glance
| PG 16 RESULTS AT A GLANCE S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 Net profit after tax increased 10.2% to $82.2 million in FY19 from $74.6 million $ millions Net profit after tax in FY18, with momentum in the second half of FY19 to be carried into FY20 90.0 82.2 80.0 7
Slide 18: Sales volume and inventory
| PG 17 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 SALES VOLUME AND INVENTORY Exceeded $1 billion in revenue for the first time, with Sales volumes (MT) 149,709 consumer packaged infant formula sales of 42,907 MT in the 160,000 141,382 140,000 128,622 middle of the guidance
Slide 19: Production volume
| PG 18 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 PRODUCTION VOLUME Realisation of manufacturing efficiencies resulted in MT Production volumes kgMS a corresponding increase in production volume 160,000 80,000 146,299 • Total powder production increased by 4.8% to 146,299
Slide 20: Gross profit performance
| PG 19 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 GROSS PROFIT PERFORMANCE Gross profit per MT was slightly lower than FY18 at Gross profit / MT $1,268 per MT, with key drivers including: 1,400.0 1,294 1,268 1,200.0 • Consumer packaged infant formula sales were at lower 1,
Slide 21: Overheads
| PG 20 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 OVERHEADS Significant investment in people, with 218 new staff $ millions Overheads joining Synlait in 2019 in advance of new production 70.0 62.1 facilities coming on-line 60.0 54.2 50.0 44.6 • Net overheads have increased
Slide 22: Operating cash flow
| PG 21 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 OPERATING CASH FLOW Strong cashflow generation with operating $ millions Operating cashflow cash flows increasing by $38.3 million to 160.0 $136.7 million from $98.4 million last year 140.0 136.7 120.0 115.2 104.4 98.4 • Ca
Slide 23: Net debt
| PG 22 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 NET DEBT Net debt increased by $218.7 million to $333.6 $ millions Net debt Leverage million at year end from $114.9 million last year 400 4.0x 350 333.6 3.5x Significant investment in major growth projects and 300 3.0x ope
Slide 24: Milk price update
| PG 23 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 MILK PRICE UPDATE Synlait milk price Average milk price of $6.58 per kgMS for the $ / kgMS 2018/2019 season which runs 1 June – 31 May. This $7.00 $0.13 $0.18 $0.14 is made up of: $6.00 $5.00 • A base milk price of $6.40; a
Slide 25: Closing Remarks
LEON CLEMENT CHIEF EXECUTIVE OFFICER CLOSING REMARKS S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 | PG 24
Slide 26: What to expect from us in FY20
| PG 25 S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 WHAT TO EXPECT FROM US IN FY20 Based on the diversification of our business and the way we create value, we are changing the way we provide guidance We expect our FY20 profits to continue to grow, with the rate of profitabi
Slide 27: Our final word
| PG 26 OUR FINAL WORD S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 Deliver. Invest. Clarify. DELIVER. We have delivered a strong financial result: • Exceeded $1 billion in revenue for the first time • Supported our customers to grow and create value while achieving significa
Slide 28: Appendices
APPENDICES S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 | PG 27
Slide 29: Gross profit by category
| PG 28 GROSS PROFIT BY CATEGORY S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 Sales volume (MT) Gross profit ($m) Gross profit / MT FY19 FY18 FY19 FY18 FY19 FY18 Powders and cream1 106,802 93,042 142.2 134.4 969 1,065 Consumer packaged 42,907 35,580 34.3 27.6 800 777 Lactofer
Slide 30: Banking facilities and covenants
| PG 29 BANKING FACILITIES AND COVENANTS S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 Synlait currently has four syndicated bank facilities in place We have four key bank covenants in place within our with ANZ and BNZ. syndicated bank facility agreement. 1. Working capital fa
Slide 31: Asset base and shareholder base
| PG 30 ASSET BASE AND SHAREHOLDER BASE S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 Shareholder base anchored by key customers • Some of Synlait’s biggest customers, namely The a2 Milk CompanyTM (17.4%), Bright Dairy (39.0%) Location Capacity (MT) Commissioning Output Facili
Slide 32: Our investment case
| PG 31 OUR INVESTMENT CASE S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 We are growth focused company with a drive to do things differently We are generating high returns We are well positioned to grow We have strategies in place on capital employed earnings off current asse
Slide 33: Disclaimer
| PG 32 DISCLAIMER S Y N L A I T M ILK L I M I T E D F U L L Y E A R R E P O RT 2 0 1 9 • This presentation is intended to constitute a summary of assumptions and should not be relied upon as an indication or negligence) for any direct or indirect loss or damage which certain information about Synla
Slide 34: Investors and media contacts
INVESTORS Hannah Lynch, Corporate Affairs Manager +64 21 252 8990 Hannah.Lynch@Synlait.com MEDIA Jessica Thorn, Senior Communications Advisor +64 3 373 3353 Jessica.Thorn@synlait.com