Comvita Limited · NZX:CVT
Comvita — H1 FY2022 Earnings Presentation
55 slides from Comvita's earnings presentation, Feb 24, 2022
Slide 1: Investor Presentation Half Year Result FY22
PRESENTED BY: I NV E S T OR PRE S E NTAT ION David Banfield, CEO HAL F YEAR RESULT FY22 Nigel Greenwood, CFO 24 FEBURARY 2022
Slide 2: Important Notice
I M PORTANT Notice This presentation is given on behalf of Comvita statements. We monitor these non-GAAP • Is for general information purposes only, and Limited. Information in this presentation: measures as key performance indicators, and does not constitute investment advice; and we believe it ass
Slide 3: Today's Agenda
T O D AY ’ S Agenda 01. 02. 03. 04. Our Focus / Arotahi ESG Half Year Cashflow, Comvita premium FMCG brand Aiming to be carbon neutral Results FY22 Inventory, and our unique business model 2025 Net Debt 2025 FOCUS Plan 05. 06. 07. 08. Market Reinvestment for Guidance Q&A Segment Long Term & Summary
Slide 4: Record Half Year Earnings
Record Half Year Earnings 01. 02. 03. 04. Number One 4 6.1% 33% Global brand leader in 4th Consecutive 6.1% revenue growth Digital share of Mānuka Honey and reporting period of despite significant total revenue Propolis earnings growth Covid headwinds D2C +12% 05. 06. 07. 08. Marketing $13.3m Operat
Slide 5: Covid 19
The Global Comvita Whānau • The health and safety of our global team of 500+ is our priority, and we are pleased to report our people are safe and well • We have taken a risk-based approach to managing our response, built around facts and science • The team response has been amazing in all markets,
Slide 6: Our Purpose
OUR Purpose “Working in harmony with bees and nature in New Zealand to heal and protect the world.” C O M V I TA I N V E S T O R P R E S E N TAT I O N H A L F Y E A R R E S U LT F Y 2 2 6
Slide 7: Our Vision
OUR Vision “To deliver world-leading standards for our team, our consumers, our shareholders and our planet, contributing to a world where bees and people can thrive in harmony. Reinvest cash to lead Industry growth and consolidation to drive higher standards for our consumers.” C O M V I TA I N V E
Slide 8: 2025 FOCUS Strategic Plan
2025 FOCUS Strategic Plan C O M V I TA I N V E S T O R P R E S E N TAT I O N H A L F Y E A R R E S U LT F Y 2 2 8
Slide 9: Our Focus
SECT ION 1 Our Focus 9
Slide 10: Arotahi: Our Focus - Premium FMCG Brand
Arotahi RIG HT PRO DUCT S OUR FOCUS - PREM IUM FM CG BRAND VERT ICAL RIG HT INT EG RAT IO N M ARKET IM PRO VED SUBSIDIAR IES Q UALIT Y & REDUCED RISK CO NSUM ER LONG T ERM PROFI TABLE G ROW T H INVEST M ENT DIG IT ISAT IO N IN BRAND, IP & SCIENCE C O M V I TA I N V E S T O R P R E S E N TAT I O N H
Slide 11: Leveraging Our Unique Business Model
LE V E RAG I NG OUR Unique BUS I NE S S M ODE L C O M V I TA I N V E S T O R P R E S E N TAT I O N H A L F Y E A R R E S U LT F Y 2 2 11
Slide 12: World Leading Science & Quality
• Comvita strategic goal of higher standards for all NZ honey to protect consumers and the industry − Achieved dual IANZ and MPI accreditation for our in-house honey testing laboratory, the only such certification held by a honey company World − More patents and publications than any other honey com
Slide 13: Headlines
• Record H1 operating profit $7.2m ,+39.4% vs PCP (+$2.0m) • EBITDA * $12.1m, + 14% +$1.5m vs PCP − Double digit top and bottom-line growth in focus growth markets, China and North America − Double digit top and bottom-line growth in Mānuka honey product category − Double digit top and bottom-line g
Slide 14: Development Plan
Development Plan CONT INUED POSIT IVE PROG RESS JAN 2021 JAN 2021 – JUN 24 JUN 24 ONWARDS Key Achievements: Key Goals: Key Goals: ● Return to profitability ● Sustainable profitable growth (all ● Clear route to carbon neutral and ● Reset capital structure market segments profitable and positive SBT’s
Slide 15: ESG
SECT ION 2 ESG 15 15
Slide 16: ESG at Comvita
ESG at Comvita ENVIRONMENTAL SOCIAL GOVERNANCE Key Focus Areas: Key Focus Areas: Key Focus Areas: ● GHG emissions ● Product quality and food safety ● Board composition (diversity and ● Air and water pollution ● Customer satisfaction independence) ● Biodiversity ● Ethical procurement ● Compliance wit
Slide 17: Our Global Whānau
Our Global Whānau 67 % 553 50 % OF GLOB A L EX ECU TI VE F U LL TI ME EQU I VA LEN T OF OU R GLOB A L R EPOR TI N G TO CEO A R E R OL ES I N OU R GL OB A L TEA M I S F EMA LE WOMEN WHĀ N A U F Y2 2 TA R GET 4 0 % 60 % 100 % 40 % OF GLOB A L R OLES LI VI N G WA GE MET OF THE COMVI TA A R E CU STOMER
Slide 18: Safety & Wellbeing
Safety & Wellbeing RE LE NT LE S S FOCUS ON S AFE T Y PRIORIT IE S -79 % -33 % -77 % TRIFR 3.0 REPORTABLE MOTOR VEHICLE FY22 TARGET –10% INJURIES INCIDENTS FY22 TARGET –10% FY22 TARGET –10% 111 MENTAL WELLBEING CHECKS +100%: NEW IN FY22 C O M V I TA I N V E S T O R P R E S E N TAT I O N H A L F Y E
Slide 19: Sustainability
Sustainability INVESTM ENT IN CARBON REDUCTION INITIATIVES INVESTM ENT IN HARM ONY PARTNERSHIPS 145 151 PE RFORM ANCE vs. PCP $ K $ K 2021: $52K 2021: $50K +178.8% +198.0% SHRINK WRAP REM OVED NATIVE TREES TREES THAT COUNT FROM SUPPLY CHAIN PLANTED THIS SEASON LEADERBOARD NZ 2.0 T 2021: 3.7T Purchas
Slide 20: Climate Action
Bee Welfare Climate Action 2 1 • • • • • • • • • 3 Community Impact 4 Native Forests & • Biodiversity • 1 •Climate Action • • • • • • • • C O M V I TA I N V E S T O R P R E S E N TAT I O N H A L F Y E A R R E S U LT F Y 2 2 20
Slide 21: Half Year Results FY22
SECT ION 3 Half Year Results FY22 21
Slide 22: Financial Key Results: Income Statement
K E Y R E S U LT S Financial I N C O M E S T AT E M E N T 31 Dec 31 Dec For the six months ended 2021 2020 Variance $ Variance % • Reported revenue +6.1% or $6m NZD 000’s Unaudited Unaudited • Strong performance in focus growth markets and Revenue (Reported Currency) 104,942 98,885 6,057 6.1% Mānuka
Slide 23: Gross Profit
Gross profit improved $10.9m from focus growth markets, focus channels D2C digital channel and productivity gains • Focus growth markets – strong performance in China and North America Gross Profit • Strong performance in UMF Mānuka honey • D2C+12% at accretive margins • Recovery of GP in ANZ market
Slide 24: Transformation
Very good progress so far with $14m of gross profit improvement since the transformation programme started through to end FY22: • Strong improvement in $ and % GP − GP improved by a further 760 bps – not all transformation related Transformation ON T RACK • Underlying cost reduction of $3m • Half ye
Slide 25: Interim Dividend
Interim • Fully imputed dividend of 2.5 cps declared Dividend • Record date: 24 March 2022 • Payment date: 31 March 2022 C O M V I TA I N V E S T O R P R E S E N TAT I O N H A L F Y E A R R E S U LT F Y 2 2 25
Slide 26: Cashflow, Inventory & Net Debt
SECT ION 4 Cashflow, Inventory & Net Debt 26
Slide 27: Financial Key Results: Balance Sheet
K E Y R E S U LT S Financial BALANCE S HE E T As at 31 Dec 31 Dec 30 June • Net debt increased by $21.7m since 30 June 2021 NZD 000’s 2021 2020 2021 to be $26.3m at half year Unaudited Unaudited Audited • Operating cash outflow at $4.9m reflects EBITDA performance adjusted for increase in working ca
Slide 28: Cashflow
Cashflow For the six months ended 31 Dec 31 Dec • Operating cash outflow at $4.9m reflects EBITDA NZD 000’s 2021 2020 Variance $ performance adjusted for working capital movements, largely in inventory Unaudited Unaudited • $5m investment into joint venture with Caravan Operating cash outflow / infl
Slide 29: Inventory
Inventory PROFILE 31 Dec 31 Dec 30 June 2021 • Inventory increased by $10.8m vs 30 June 21 As at 2021 2020 NZD 000’s Audited • Raw materials increased by $11.3m vs 30 June 21 to Unaudited Unaudited mitigate supply chain disruption Raw materials 72,062 65,733 60,762 • FG Inventory in market forecast
Slide 30: Capital Expenditure
Capital Expenditure As at 31 Dec 2021 31 Dec 2020 • Continued investment into our forest strategy with a NZD 000’s further $1.9m invested in H1 Unaudited Unaudited • Further investment into manufacturing process Mānuka forest development 1,882 2,410 improvements to improve productivity and increase
Slide 31: Market Segments Performance
SECT ION 5 Market Segments Performance 31
Slide 32: Market Headlines
• Our business model is unique with our global in market subsidiary team − Closer to customer − Closer to consumer − Faster to act − Primacy of market M ARKE T − Team capability enhanced Headlines • Strong growth in focused growth markets − Mainland China: Revenue +13% net contribution (NC) +40% rat
Slide 33: Revenue
Revenue G REAT ER CHINA M AINLAND CHINA NO RT H AM ERICA PE RFORM ANCE vs. PCP $47.7 40.0 2021 : $47.6m M $ 2021 : $35.5m M 17.2 $ 2021 : $11.6m M 0% +13% +48% REPORTED CURRENCY REST O F ASIA AUST RALIA + NZ EM EA $12.7 2021 : $12.6m M $18.1 2021 : $18.1m M $2.9 2021 : $3.4m M +1% 0% -15% C O M V I
Slide 34: Net Contribution
Net Contribution G REAT ER CHINA M AINLAND CHINA NO RT H AM ERICA PE RFORM ANCE vs. PCP 12.0 10.5 $ 2021 : $11.2m M $ 2021 : $7.5m M $5.3 M 2021 : $3.0m +7% +40% +75% REPORTED CURRENCY REST O F ASIA AUST RALIA + NZ EM EA $3.3 2021 : $3.7m M $6.1 M 2021 : $6.3m $0.2 M 2021 : $0.1m Net Contribution is
Slide 35: Focus Growth Markets: China & North America
FOCUS Growth Markets CHINA & NORT H AM E RI CA FOCUS STRUCTURED LONG-TERM INVESTMENT TO GROW T.A.M AND MARKET SHARE Double digit top and bottom line growth Growing market share in both Markets 35
Slide 36: Greater China
GREATER CHINA ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. Dec 2021 Dec 2020 Last Year Last Year % Sales 47,740 47,615 125 0% Net Contribution* 11,986 11,232 754 7% Net Contribution % 25% 24% 1% • Revenue flat vs PCP • Strong performance in mainland China offset by challenging
Slide 37: Mainland China
MAINLAND CHINA ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. Dec 2021 Dec 2020 Last Year Last Year % Sales 39,984 35,481 4,503 13% Net Contribution* 10,545 7,525 3,020 40% Net Contribution % 26% 21% 5% • Continuing to grow share in the worlds biggest honey market – YTD honey mar
Slide 38: Mainland China Market Highlights
• Strong revenue growth despite massive Covid related disruption to retail • Record results in key festivals mid autumn festival,11:11 and 12:12 • New distribution and partnerships agreed in H1 being implemented in H2 • Continued focus – positioning Comvita as a premium lifestyle brand M ainland Chi
Slide 39: North America
NORTH AMERICA ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. Dec 2021 Dec 2020 Last Year Last Year % Sales 17,178 11,617 5,561 48% Net Contribution* 5,296 3,031 2,265 75% Net Contribution % 31% 26% 5% • The US is the second largest honey market in the world – Comvita growing shar
Slide 40: North America Market Highlights
• Comvita remains the fastest growing Mānuka honey brand in MULO (conventional grocery) channel in the US, growing over 250% YoY, per SPINS data • Sell-through in key national grocery retailer we launched in 2020 is up 48% last 26 weeks YoY • Gained new placement on key digital partner in late H1 wi
Slide 41: Rest of Asia
FOCUS Rest of Asia K O R E A , J A PA N A N D S OUT H E AS T AS IA FOCUS SELF FUNDING PROFITABLE GROWTH 41
Slide 42: Rest of Asia
REST OF ASIA ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. Dec 2021 Dec 2020 Last Year Last Year % Sales 12,698 12,572 126 1% Net Contribution* 3,252 3,747 (495) (13%) Net Contribution % 26% 30% (4%) • Total revenue growth +1% with strong growth in most markets offset by challen
Slide 43: ANZ Performance
FOCUS ANZ Performance AUS T RALI A AND NE W ZE ALAND FOCUS BUILDING DOMESTIC STRENGTH AND DISTRIBUTION Enhance Digital Investment and capability Brand Investment for long term profitable growth 43
Slide 44: Australia & New Zealand
AUSTRALIA & NEW ZEALAND ON A REPORTED CURRENCY BASIS NZD 000’S This Year Last Year Vs. Vs. Dec 2021 Dec 2020 Last Year Last Year % Sales 18,061 18,092 (31) 0% Net Contribution* 6,051 6,279 (228) -4% Net Contribution % 34% 35% -1% • Market revenue flat year on year • Sell out improving month on month
Slide 45: EMEA
FOCUS EMEA UK, E UROPE , M I DDLE E AS T AND AFRICA FOCUS SELF FUNDING PROFITABLE GROWTH 45
Slide 46: Europe, Middle East & Africa (EMEA)
EUROPE, MIDDLE EAST & AFRICA (EMEA) ON A REPORTED CURRENCY BASIS NZD 000’S This year Last Year Vs. Vs. Dec 2021 Dec 2020 Last Year Last Year % Sales 2,900 3,394 (494) (15%) Net Contribution* 238 139 99 71% Net Contribution % 8% 4% 4% • Revenue negatively impacted by Covid closures and digital implem
Slide 47: Reinvesting for Long term growth
SECT ION 6 Reinvesting for Long term growth 47
Slide 48: M&A Activity
• Base Comvita strategic plan (60:15:20) will deliver surplus cash through to FY25 and beyond • With transformation showing positive signs and confidence of ability to deliver 2025 base plan we are looking at opportunities to drive our growth credentials through a combination of M&A, organic growth
Slide 49: Caravan Joint Venture
• In September we announced our joint venture with Caravan, an entertainment and sports agency, Creative Artists Agency (CAA) • Caravan create consumer brands and companies, co-founded with people of influence Caravan • To develop transformative Direct-To-Consumer products, technology and companies
Slide 50: Caravan Joint Venture
• Central to our partnership with Caravan is the formation of a celebrity-backed Caravan lifestyle brand • Using the healing properties of Mānuka Honey and Propolis for topical use • In December we invested $5M of initial capital into this venture JOINT VENT URE • Details at this stage remain commer
Slide 51: Guidance & Summary
SECT ION 7 Guidance & Summary 51
Slide 52: FY22 Guidance
• FY22 EBITDA guidance-maintained range of $27.0m to $30.0m given current balance of risk • Full year positive operating cash flow FY2 2 M ARKE T • Continued double digit top & bottom-line growth in; Guidance − Focus growth markets of China and North America − Mānuka honey and − D2C sales • Mid sing
Slide 53: Summary
• Building momentum – record H1 operating profit +39.4% • Double-digit top and bottom-line growth in: ‒ Focus growth markets, China and North America ‒ Digital channel (D2C) ‒ Mānuka honey Summary • Simplified business • Inventory increased to manage supply disruption • Fully imputed interim dividen
Slide 54: Q&A
SECT TI O N 8 Q&A 54
Slide 55: Thank You
T HANK YOU COM V ITA. COM