Slide 1: Agility in Unpredictable Times
Agility in PRESENTED BY: INVESTOR PRESENTATION FULL YEAR RESULT FY24 Unpredictable David Banfield, CEO Nigel Greenwood, CFO Brett Hewlett, Chair Times 29 AUGUST 2024
Slide 2: Notice
I M P O R TAN T Notice This presentation is given on behalf of Comvita They should not be used in substitution for, or which should not be regarded as a reliable Limited. Information in this presentation: isolation of, Comvita’s audited financial indicator of future performance; statements. We monit
Slide 3: FY24 Financial Headlines
FY24 Financial Headlines • Revenue $204.3M : -12.7% (-$28.9M) vs PCP (FY23: $234M) − Greater China market revenue -$19.2M or -17.6% vs PCP, GP impact -$15.3M vs PCP − US market revenue -$9.5M or -26.6% vs PCP, GP impact -$5.3M vs PCP • Gross profit 55% : -300bps vs PCP (FY23: 58%) • Non-cash impairm
Slide 4: Summary
FY24 Summary HEADLINES • Revenue and associated gross profit in key markets were hit by a combination of − General macro economic slowdown in our biggest market − Price competition in entry point segments of Mānuka honey − Mānuka honey contraction in our biggest market • Over supply from pre 2019 ha
Slide 5: Our Response
FY24 Our Response • Good and Better product range launched to target short term ‘value’ segment and expanded distribution • Value range launched in China market, April 2024 • Enhanced consumer education on Comvita quality and partnership with other high profile premium brands across Asia • Regional
Slide 6: Income statement
K E Y R E S U LT S Income statement FY24 For the year ended 30 June 30 June Commentary NZD 000s 2024 2023 Variance $ Variance % • Total revenue -$29.9M or -12.7% Revenue 204,341 234,195 (29,854) (12.7%) • China and North America combined -$28.7M Gross Profit % 55.0% 58.0% (3%) • SEA +$7.9M - offsett
Slide 7: Impairment and Non-recurring Items
FY24 Impairment and Non-recurring Items N O N - C A S H I M PA I R M E N T NON-RECURRING COSTS • Impairment test was indicated due to a material gap between the company’s net total assets (tangible and • Net profit after Tax of -$16.9M intangible) and its market capitalisation • Total non-recurring
Slide 8: Reconciliation of Group Results
K E Y R E S U LT S Reconciliation of Group Results R E P O R T E D T O U N D E R LY I N G F Y 2 4 Gross NZD 000s Revenue Profit EBITDA EBIT NPAT Reported Results 204,341 112,389 (59,651) (73,506) (77,388) Commentary • After adjusting for one off non trading Remove ERP* Costs 7,245 7,245 5,216 items
Slide 9: Key Balance Sheet Items
K E Y R E S U LT S Key Balance Sheet Items FY24 As at 30 June 30 June Commentary NZD 000s 2024 2023 Audited Audited Variance $ • Net debt $79.7M up $26.3M or +49.3% on PCP • HoneyWorld acquisition and Apiter investments Net Debt 79,707 53,386 26,321 debt funded ($9.8M) as well as lower operating Deb
Slide 10: Inventory
K E Y R E S U LT S Inventory FY24 As at 30 June 30 June NZD 000s Commentary 2024 2023 Audited Audited Variance $ Variance % • Inventory has decreased by $1.7M vs PCP Finished Goods 64,609 47,558 17,051 35.9%) • Raw materials decreased by $15.2M reflecting the benefits of unwinding the previous long
Slide 11: Cashflow
K E Y R E S U LT S Cashflow FY24 As at 30 June 30 June NZD 000s 2024 2023 Audited Audited Variance $ Commentary Operating Cash Inflow 5,333 8,083 (2,750) • Operating cashflow of $5.3M down $2.8M on Investing Activities (13,654) (20,754) (7,100) prior year predominantly due to lower earnings Financin
Slide 12: Cost out target $10M-$15M vs FY24
Cost out target $10M-$15M vs FY24 FY25 Savings Annualised Headcount Savings reduction vs FY24 COGS $2M- $5M $5M- $8M 22 Commentary • On track to deliver $5-10M cost savings in FY25 OPEX $3M - $5M $5M-$7M 31 and annualised savings of $10-$15M • Headcount to be reduced by 53 positions versus FY24 actu
Slide 13: Challenges & Actions: High Inventory & Net Debt
FY24 Challenges & Actions HIGH INVENTORY & NET DEBT The issue • Lower sales than forecast meant despite reducing NET DEBT Action to date Inventory held as raw materials cash is tied up in ✓ Increased in market activity to reduce finished good elevated finished goods in market preventing early pay do
Slide 14: Segmental Performance
FY24 Segmental Performance 14
Slide 15: Sales and Gross Profit Impact
FY24 Sales and Gross Profit Impact REVENUE -$28.8M : GP -$20.6M VS PCP GREATER CHINA NORTH AMERICA FY24 FY23 FY24 FY23 $ 89.8 M VS 109.0 $ M $ 26.1 M VS $ 35.6 M (-$19.2M or -17.6% vs PCP) (-$9.5M or -26.6% vs PCP) • Mainland China sales -23% or -$20M • North America sales -$9.5M • Impacted by parti
Slide 16: Other Segments Full Year Performance
OTHER SEGMENTS FULL YEAR PERFORM ANCE REPORTED+ CURRENCY AUSTRALIA NEW ZEALAND Vs. This Year Last Year Vs. Last Year Segment NZD 000s Jun-24 Jun-23 Last Year % • Rest of Asia sales up $5.3M or 16.6% Rest of Asia Sales 37,059 31,771 5,288 16.6% • Sales growth contributed by HoneyWorld acquisition. Ne
Slide 17: China Market Dynamics
FY24 China Market Dynamics • FY24 surprise contraction in China total honey market from July 2023 − All honey category* sales out -17.5% − Mānuka honey category* sales out -15.5% • Comvita FY24 Mānuka honey sales -20% like for like − Performance declined due to cancellation of major China shopping f
Slide 18: Comvita Mānuka Honey Sales
Comvita Mānuka Honey Sales* FY23 & FY24 M AT E R I A L D I S R U P T I O N D U R I N G T H R E E F E S T I VA L S Mānuka Honey Monthly Sales 11:11 Cancellation China New Cancellation of 6:18 Festival 12:12 Festival Year shopping Festival Commentary • Sales out up 1% for July to October 2023 (channel
Slide 19: Greater China Full Year Performance
GREATER CHINA FULL YEAR PERFORMANCE This Year Last Year Vs. Vs. NZD 000s Jun-24 Jun-23 Last Year Last Year % Sales 89,820 109,005 (19,185) (17.6%) Net Contribution 17,204 26,821 (9,617) (35.9%) Net Contribution % 19.2% 24.6% (5.4%) • Total segment revenue (19.2M) vs PCP impacted by Mainland China pe
Slide 20: Premiumisation & Leadership in China
FY24 Premiumisation & Leadership in China COMVITA INVESTOR PRESENTATION FULL YEAR RESULT FY24 20
Slide 21: Regional New Product Development
FY24 Regional New Product Development COMVITA INVESTOR PRESENTATION FULL YEAR RESULT FY24
Slide 22: COMVITA INVESTOR PRESENTATION FULL YEAR RESULT FY24
COMVITA INVESTOR PRESENTATION FULL YEAR RESULT FY24 22
Slide 23: Challenges & Actions: China Market Demand
FY24 Challenges & Actions CHINA MARKET DEMAND The issue Action to date CHINA HONEY • Abrupt change in consumer demand caused by: ✓ Harmonised pricing (offline : online), added focused MARKET REVENUE resource to enable more balanced distribution • General consumer confidence following macro economic
Slide 24: North America Full Year Performance
NORTH AMERICA FULL YEAR PERFORMANCE This Year Last Year Vs. Vs. NZD 000s Jun-24 Jun-23 Last Year Last Year % Sales 26,135 35,608 (9,473) (26.6%) Net Contribution 4,657 8,868 (4,211) (47.5%) Net Contribution % 17.8% 24.9% (7.1%) • Total revenue -$9.5M vs PCP as previously explained • Comvita revenue
Slide 25: Engagement & Affinity in North America
FUNCTIONAL & EMOTIONAL Engagement & Affinity in North America REFRESHED BRAND EXPRESSION Product benefit focus = Digestion + Energy & Vitality + Immunity Emotional engagement = A few minutes’ “escape” + indulgent wellbeing COMVITA INVESTOR PRESENTATION FULL YEAR RESULT FY24 25
Slide 26: Challenges & Actions: Lost Distribution in US
FY24 Challenges & Actions LOST DISTRIBUTION IN US The issue Action to date • At the start of FY24 we lost some distribution with one of our biggest ✓ Strengthened the team, appointed a new Country Manager, customers strengthened online performance including Amazon (+61%) Context ✓ Refreshed brand co
Slide 27: Industry Dynamics
FY24 Industry Dynamics 27
Slide 28: Volume of Honey Produced in New Zealand
2000 – 2023 Volume of Honey Produced IN NEW ZEALAND Commentary • Hive numbers trebled between 2008 and 2019 peaking at c1M hives and exports grew by c500% • Created an industry overstock • Between 2020 and 2023 honey production has fallen by -56% • Ongoing supply now more aligned to demand, however,
Slide 29: Comvita Owned Mānuka Forests
FY22 – FY30 Comvita Owned Mānuka Forests • Comvita owned forests offer long term sustainable supply with cost advantages • 44% of apiary supply from our forest by 2030 and with a 20% saving in cost per hive will save us c$4M pa COMVITA INVESTOR PRESENTATION FULL YEAR RESULT FY24
Slide 30: New Zealand Honey Export Value
2002 – 2023 New Zealand Honey Export VAL U E Commentary • Exports grew five-fold between 2008 and 2017 • Exports reduced by -18% 2017 to 2019, +10% CAGR 2018 - 2021 • New Zealand honey export value has fallen by -26% from the peak in 2020 COMVITA INVESTOR PRESENTATION FULL YEAR RESULT FY24 30
Slide 31: Honey Market
FY24 Honey Market KEY DEMAND DYNAMICS • US is the biggest single market for Mono-floral honey. No dominant brand, Comvita currently lacks scale • China market number two globally, exports c3% CAGR since 2020, Comvita exports 15% CAGR since 2020. Comvita c54% market share in China • Aggressive price
Slide 32: Summary
Summary 32
Slide 33: Summary
FY24 Summary FY24 RESULT • FY24 revenue impacted by aforementioned challenges in all market segments • Exacerbated by short term price driven competition created by over supply • Underlying FY24 NPAT -$9.3M ACTION TAKEN • Comvita Good and Better range targeting value consumers and increased distribu
Slide 34: Q+A
Q+A 34
Slide 35: Appendices
Appendices 35
Slide 36: Reconciliation of Impairment to $64M
FY24 Reconciliation of Impairment to $64M Commentary 2024 In thousands of New Zealand dollars • The impairment as announced on 26 August of $59.8M together 30 June with the impairment taken up earlier associated with our Medibee 30,647 JV of $4.4M. Total FY24 impairment of $64.2M. Greater China – Go
Slide 37: Delivering Environmental and Social Impact
DELIVERING ENVIRONMENTAL AND SOCIAL Impact 37
Slide 38: Global Whanau and Safety & Wellbeing
PERFORMANCE VS PCP Global Whanau and Safety & Wellbeing 1 J U LY 2 0 2 3 – 3 0 J U N E 2 0 2 4 2.7 1.1 4.6pts S A F E TY MA TU R I T Y TR I F R L TI F R SCORE ↓ - 2 9 % vs F Y 2 3 ( 3 . 8 ) ↓ - 5 9 % vs F Y 2 3 ( 2 . 7 ) ↑ + 1 0 5 % vs F Y 2 3 ( 2 . 2 4 ) + 21 65% 100% E MP L O YE E P R O MO T E R O
Slide 39: GHG Summary
FY24 GLOBAL GHG Summary R E S U LT S GREENHOUSE GAS EMISSIONS – GLOBAL tCO2e FY24 FY23 Difference tCO2e tCO2e % Total Gross Emissions (S1,2,3)1 26,079 34,944 (25%) Removals GHG Inventory2 (1,488) (5,842) (75%) Total Net GHG Inventory Emissions 24,591 29,012 (16%) Comvita NZ ETS NZUs3 (3,730) (743) 4
Slide 40: COMVITA.COM
COMVITA.COM