Synlait Milk Ltd. · NZX:SML
Synlait Milk — FY2021 Earnings Presentation
39 slides from Synlait Milk's earnings presentation, Sep 27, 2021
Slide 1: Synlait Milk Full Year Investor Presentation
SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION For the 12 months ended 31 July 2021 Doing Milk Differently For A Healthier World
Slide 2: Today's Result: Key Takeaways
PAGE 02 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 TODAY’S RESULT Key takeaways • FY21 proved to be very challenging for Synlait. We have reviewed and remain confident in our strategy. 1 However, execution clearly needs to improve. • After nine straight years of solid profitability we are dis
Slide 3: Today's Announcements: CEO & Governance Changes
PAGE 03 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 TODAY’S ANNOUNCEMENTS: CEO & GOVERNANCE CHANGES Graeme Milne ONZM Chair A staff member plants out seedlings at our Whakapuāwai nursery at Synlait Dunsandel.
Slide 4: Grant Watson Appointed as CEO
PAGE 04 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 GRANT WATSON APPOINTED AS CEO • The Board has appointed Grant Watson as CEO. “Grant has a track record of materially transforming and accelerating businesses by setting clear • Grant is currently CEO of dairy company, Miraka. strategies, surr
Slide 5: Proposed Governance Changes
PAGE 05 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 PROPOSED GOVERNANCE CHANGES To be voted on by shareholders • As previously signalled, Graeme Milne stated his intention to retire by rotation at Proposed 2022 Board Structure Synlait’s Annual Meeting in December. However, considering Synlait’
Slide 6: Financial Performance
PAGE 06 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 FINANCIAL PERFORMANCE Robert Stowell Chief Financial Officer We celebrated the opening of our rail siding in May with Lyttelton Port Company, KiwiRail, our staff, and contractors involved in the project.
Slide 7: Results Overview: The Bull-Whip Effect
PAGE 07 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 RESULTS OVERVIEW What Happened To Synlait In FY21: ‘The Bull-Whip Effect’ • FY21 proved to be very challenging for Synlait. • After nine years of profitability, it is very disappointing to post the company’s largest ever loss. • COVID-19 hit
Slide 8: Key Financial Metrics
PAGE 08 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 KEY FINANCIAL METRICS 65M $ 1.4 B 9% 416% $ 479.4 M 12.9 REVENUE NET DEBT DEBT/EBITDA 103M $ (28.5) M 85% 11% $ 15.9 M $ 1.2 B NPAT OPERATING CASH FLOW NET OPERATING ASSETS 132M $ 37.3 M 7% 140.4 M 7.82 kgMS $0.52 kgMS $ $ EBITDA CAPITAL EXPE
Slide 9: What Happened to Synlait's FY21 NPAT Result?
PAGE 09 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 WHAT HAPPENED TO SYNLAIT’S FY21 NPAT RESULT? Infant formula external and internal factors such as butter Synlait’s FY21 NPAT Performance We expect to return to robust (consumer-packaged and base powders) prices verses AMF, sales phasing, mix
Slide 10: Production and Inventory Volumes
PAGE 10 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 PRODUCTION AND 180,000 Production volumes INVENTORY VOLUMES 160,000 Annual Production (MT) 140,000 Large and sudden increase 120,000 in ingredient production due 100,000 to the swing 80,000 from infant base powders to • Production of consumer
Slide 11: Business Unit Performance: Nutritionals and Ingredients
PAGE 11 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BUSINESS UNIT PERFORMANCE Nutritionals Ingredients 593.9 3,215 125,914 321 52,871 634.6 405.7 510.2 97,561 34,362 1,246 115 Revenue ($m) Sales Volume (MT) Gross Profit $/MT Revenue ($m) Sales Volume (MT) Gross Profit $/MT FY20 FY21 FY20 FY21
Slide 12: Business Unit Performance: Liquids and Consumer Foods
PAGE 12 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BUSINESS UNIT PERFORMANCE Liquids Consumer Foods (66) (154) 39.1 37.2 32,803 31,499 229.0 26,983 568 93.0 12,015 186 Revenue ($m) Sales Volume (MT) Gross Profit $/MT Revenue ($m) Sales Volume (MT) Gross Profit $/MT FY20 FY21 FY20 FY21 Liquids
Slide 13: Operating Costs (SG&A)
PAGE 13 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 OPERATING COSTS (SG&A) • As previously indicated operating costs have stabilised. The increased costs $ millions SG&A Costs were driven by the full year inclusion of Dairyworks (FY21: 12 months vs FY20: 100.0 4 months). 11.4 4.6 • Savings acr
Slide 14: Cash Flow and Capital Spend
PAGE 14 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 CASH FLOW AND $ millions 140.0 Cash flows from operating activities CAPITAL SPEND 105.0 70.0 136.7 115.2 103.8 Operating Investing 98.4 35.0 • Historically operating cashflows • Synlait’s capital spend is winding down average > $100M per annu
Slide 15: Net Debt and Bank Refinancing
PAGE 15 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 NET DEBT AND $ millions 600.0 Net Debt BANK REFINANCING 450.0 300.0 527.0 Net debt New bank refinancing 479.4 150.0 333.6 • Net debt (excluding lease liabilities) • New terms to refinance Synlait’s maturing decreased to $479.4M. syndicated ba
Slide 16: Strategy & Operational Performance Update
PAGE 16 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 STRATEGY & OPERATIONAL PERFORMANCE UPDATE John Penno Chief Executive Officer Our Made With Better Milk Whole Milk Powder.
Slide 17: Our Strategy Remains Fit for Purpose
PAGE 17 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 OUR STRATEGY REMAINS FIT FOR PURPOSE AND HAS MATURED INTO FOUR KEY PARTS • Ingredients – an efficient and focused business that manufactures high-quality whole and skim milk powder and milk fat products from a differentiated milk supply HEART
Slide 18: Learnings from the Year That's Been
PAGE 18 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 LEARNINGS FROM THE YEAR THAT’S BEEN • Synlait typically produces 45% to 50% of its infant base powder during the The Bull Whip Effect shoulder season as milk quality is high and manufacturing capacity is available. • These nutritionals powder
Slide 19: Learnings from the Last Five Years
PAGE 19 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 LEARNINGS FROM THE LAST FIVE YEARS During the final quarter of FY21, Board and 1 New business areas had been slower to develop than planned management completed a comprehensive While major capital facilities had been built to budget, and oper
Slide 20: The Path to Recovery: Aligning Structure to Strategy
PAGE 20 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 THE PATH TO RECOVERY: ALIGNING STRUCTURE TO STRATEGY AND RESETTING HOW WE OPERATE • Leadership and resourcing now CORPORATE SERVICES aligned around key business units: Nutritionals, Ingredients, Supply Synlait Pokeno and Auckland: D4, wetmix
Slide 21: The Path to Recovery: New Organisational Structure
PAGE 21 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 THE PATH TO RECOVERY: SYNLAIT’S NEW ORGANISATIONAL STRUCTURE • Headcount reduced by 15%. • FY22 savings of approximately $6 to $8 million. Suzan Horst Nigel Macdonald** Robert Stowell* Boyd Williams Deborah Marris Chris France Grant Watson***
Slide 22: Business Update: Ingredients
PAGE 22 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BUSINESS UPDATE INGREDIENTS FY21 performance FY22 focus • Ingredients business under performed • Separating out the Ingredients business relative to expectations. will enable a renewed focus on facility utilisation, manufacturing efficiencies
Slide 23: Business Update: Nutritionals - The a2 Milk Company
PAGE 23 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BUSINESS UPDATE NUTRITIONALS The a2 Milk Company • The a2 Milk Company partnership remains Synlait’s SAMR renewal process remains on track most important, and is expected to continue to be for some years. Now • Business development opportunit
Slide 24: Business Update: Nutritionals - New Multinational Customer
PAGE 24 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BUSINESS UPDATE NUTRITIONALS Synlait Pokeno’s new multinational customer • Synlait signed a third-party manufacturing agreement Project timeline remains on track with an established, global category leader in the Asia Pacific region, for spra
Slide 25: Business Update: Nutritionals - FY22 Focus
PAGE 25 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BUSINESS UPDATE NUTRITIONALS FY22 focus China’s domestic supply is building 38.9% 39.6% • Leverage capability, assets and customer relationships to grow nutrition business in various segments. Focus is on developing and maintaining 32.9% 31.4
Slide 26: Business Update: Liquids
PAGE 26 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BUSINESS UPDATE LIQUIDS FY22 focus FY22 product pipeline • Focus is on developing and nurturing this new high- Synlait Swappa Bottle value, future-focused product suite ultimately aimed at the maturing China market and Australia and • First c
Slide 27: Business Update: Consumer Foods
PAGE 27 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BUSINESS UPDATE CONSUMER FOODS Dairyworks: Moving from Cheese to Dairy FY21 performance FY22 focus • Divestment of Deep South brand and associated ice • Dairyworks’ ambition is to become the second cream operations enabled continued progressi
Slide 28: Outlook
PAGE 28 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 OUTLOOK John Penno Chief Executive Officer We will launch our first consumer foods product under our own brand – Synlait Swappa Bottle – next month.
Slide 29: Full Year 2022 (FY22) Guidance Statement
PAGE 29 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 FULL YEAR 2022 (FY22) GUIDANCE STATEMENT Synlait expects its Net Profit After Tax result to return to robust profitability in FY22 based on: • A return to normal trading conditions and tighter management of its Ingredient business; • Improved
Slide 30: We Remain Confident in Synlait's Immediate Outlook
PAGE 30 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 WE REMAIN CONFIDENT IN SYNLAIT’S IMMEDIATE OUTLOOK Takeaways from today We have reviewed and remain confident in our strategy, which has matured 1 into four key parts. However, execution clearly needs to improve. We have reset the organisatio
Slide 31: Appendices
PAGE 31 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 APPENDICES Last summer Dairyworks launched a range of truly differentiated high protein yoghurts in a convenient on-the-go single format.
Slide 32: Key Financial Metrics
PAGE 32 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 KEY FINANCIAL METRICS $ millions Revenue $ millions Gross Profit 1,400.0 1,367.3 250.0 1,302.0 203.7 1,024.3 200.0 186.3 1,050.0 166.5 879.0 759.0 150.0 120.9 100.4 700.0 112.1 80.5 100.0 68.3 67.3 350.0 7.6 50.0 86.0 85.9 82.9 43.7 59.7 FY17
Slide 33: Key Financial Metrics: Revenue and Volumes
PAGE 33 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 KEY FINANCIAL METRICS $ millions Revenue increase year on year Sales volumes (MT) 300.0 27% 250,000 200,000 12,015 26,983 225.0 39% 8,947 31,499 32,803 150,000 34,362 17% 24,576 150.0 277.8 51,231 52,871 16% 42,177 100,000 212.1 75.0 145.3 5%
Slide 34: Key Financial Metrics: Returns and Leverage
PAGE 34 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 KEY FINANCIAL METRICS Gross profit per MT* Return on capital employed % Debt/debt + equity 1,283.0 47.2% 1,168.0 39.3% 1,031.0 22.7% 38.7% 771.0 18.3% 14.9% 20.9% 12.6% 18.7% 310.0 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21(1.5%) FY17
Slide 35: Milk Price, Milk Pool and Milk Collected
PAGE 35 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 MILK MILK NET MILK PRICE POOL COLLECTED kgMS kgMS No. of farms (thousands) (thousands) $0.27 $8.00 $0.25 300 100,000 $0.13 $0.18 90,000 $0.14 250 80,000 $6.00 200 70,000 60,000 82,737 $4.00 $7.55 150 50,000 70,472 $6.65 $7.05 64,954 60,785 66
Slide 36: Gross Profit Performance by Category
PAGE 36 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 GROSS PROFIT PERFORMANCE BY CATEGORY FY17 FY18 FY19 FY20 FY21 Sales Volume (MT) Nutritionals 26,121 42,177 51,231 52,871 34,362 Ingredients 114,718 86,424 98,499 97,561 125,914 Liquids - - 8,947 32,803 31,499 Consumer Foods - - - 12,015 26,98
Slide 37: Banking Facilities, Covenants and Bond Issue
PAGE 37 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 BANKING FACILITIES, COVENANTS AND BOND ISSUE Synlait currently has four syndicated bank facilities in place with Synlait has key financial covenants in place with its banking syndicate for ANZ and BNZ: FY22. These are: 1. Working capital faci
Slide 38: Disclaimer
PAGE 38 SYNLAIT MILK FULL YEAR INVESTOR PRESENTATION 2021 DISCLAIMER This presentation is intended to constitute a summary of certain statements and projections involve known and unknown risks, Any past performance information in this presentation is given for information about the Synlait Group (“S
Slide 39: Investors and Media
INVESTORS AND MEDIA Hannah Lynch Corporate Affairs Manager +64 21 252 8990 hannah.lynch@synlait.com