A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — H1 FY2017 Earnings Presentation
20 slides from A2 Milk's earnings presentation, Feb 15, 2017
Slide 1: FY17 Half Year Interim Results
For personal use only FY17 HALF YEAR INTERIM RESULTS GEOFFREY BABIDGE MANAGING DIRECTOR & CEO 15 FEBRUARY 2017 a2 Milk™ a2 Platinum™ and The a2 Milk Company™ are trademarks of The a2 Milk Company Limited
Slide 2: Agenda
Agenda • Financial highlights For personal use only • Strategic agenda update • Regional update • Research and development • Conclusions and outlook 2
Slide 3: Key financial charts
Key financial charts Group Revenue (NZ$ million) Group EBITDA1 (NZ$ million) Operating Cash Flows (NZ$ million) For personal use only 352.8 64.1 256.1 54.6 213.6 38.1 155.1 35.9 64.1 256.1 80.3 (4.1) (10.0) 139.2 4.8 18.7 74.8 FY15 FY16 FY17 FY15 FY16 FY17 1H15 1H16 1H17 1H 2H 1H 2H 1 EBITDA is a no
Slide 4: 1H17 result highlights
1H17 result highlights1 • Total Group revenue of $256.1 million, an increase of 84% on pcp (prior corresponding period) • Group a2 Platinum® infant formula revenue of $184.5 million, up 150% on pcp For personal use only • Operating EBITDA2 of $64.1 million, up 243% on pcp • Net profit after tax of $
Slide 5: Financial overview
Financial overview NZ$ million 1H17 1H16 Movement % For personal use only Segment Operating Segment Operating Segment Operating Operating Segment Revenue EBITDA1 Revenue EBITDA Revenue EBITDA ANZ 206.6 70.4 127.9 34.5 +62% +104% China and other Asia 37.7 13.7 8.4 1.2 +348% +1,021% Corporate and othe
Slide 6: Financial summary
Financial summary NZ$ million 1H17 1H16 % change For personal use only Revenue 256.1 139.2 +84% Gross margin 119.0 57.0 +109% • Gross margin reflects increased contribution from infant formula sales Sales & Distribution (11.2) (7.2) +56% Marketing (16.0) (10.0) +60% • Continued investment in marketi
Slide 7: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures For personal use only NZ$ million 1H17 1H16 Australia & New Zealand Segment EBITDA 70.4 34.5 China & other Asia Segment EBITDA 13.7 1.2 UK & USA Segment EBITDA (7.7) (8.1) Corporate & other Segment EBITDA (12.3) (8.9) EBITDA1 64.1 18.7 Depreciation/Amortisation (1
Slide 8: Cash position
Cash position Group Cash Movement: 1H17 (NZ$ million) For personal use only • Inventory reduction reflects strong 1H infant formula sales and conservative management of production and inventory • Working capital movement driven largely by increase in trade debtors and prepayments relating to infant
Slide 9: Strategic agenda update
Strategic agenda update • The growth of infant formula has driven the shift to a broader Growth in Group Infant Formula Sales (NZ$m) nutritional products strategy For personal use only 214.4 • Additional nutritional products are planned for launch during 184.5 calendar 2017 140.5 • Comprehensive str
Slide 10: Australia and New Zealand
Australia and New Zealand • ANZ Segment Total Revenue $206.6 million (62% increase), Operating EBITDA $70.4 million (104% increase) For personal use only • ANZ continued to show strong momentum - sales and earnings well ahead of plan and pcp • Significant growth in a2 Platinum® infant formula – Cont
Slide 11: China and other Asia
China and other Asia • China Segment Total Revenue $37.7 million (348% increase), Operating EBITDA $13.7 million (1,021% increase) For personal use only • Sales and earnings grew strongly on pcp • Brand awareness and IF market share growing rapidly from ~0.7% to ~2.6% value share of defined market f
Slide 12: a2MC expects annual category growth ~5-10% over next three years
a2MC expects annual category growth ~5-10% over next three years For personal use only Total China Infant Formula Market: Annual Volume Growth Volume (Official + Grey) (‘000 Tons) ~5-10% 1,300 CAGR 1,200 1,100 1,000 15% 14% 12% 950 CAGR CAGR CAGR 900 900 800 770 700 680 600 570 490 500 410 400 350 3
Slide 13: Brand awareness and understanding is building in China
Brand awareness and understanding is building in China1 Brand perception ~July 2015 Brand perception ~ Sept 2016 For personal use only Brand • Mainly premium Australian image driven • Premium image remains knowledge • Little knowledge and understanding of A2 protein • A2 protein understanding emergi
Slide 14: China infant formula regulatory environment
China infant formula regulatory environment • A number of regulatory changes announced during calendar 2016 are being implemented For personal use only • a2MC continues to adjust its manufacturing and distribution model in response to evolving market conditions 1. CBEC1 grace The May 2017 CBEC grace
Slide 15: United States of America
United States of America • USA & UK Segment Total Revenue $11.8 million (310% increase), Operating EBITDA $(7.7) million (5% decrease) • The USA business continued to build distribution and sales of liquid milk in California For personal use only – Distribution in ~1,800 stores in California, Pac NW
Slide 16: United Kingdom
United Kingdom • USA & UK Segment Total Revenue $11.8 million (310% increase), Operating EBITDA $(7.7) million (5% decrease) For personal use only • Positive operating earnings for the half year for the first time • Average rates of sale in-store improved by ~40% on pcp • Sales of a2 Milk™ branded f
Slide 17: IP and R&D
IP and R&D • The Company continues to initiate and support R&D around the benefits of A1 protein-free products and develop its Intellectual Property portfolio (including brand assets and proprietary know-how) For personal use only • New studies initiated across China, USA and ANZ with a focus on hum
Slide 18: Conclusions and outlook
Conclusions and outlook • Exceptional 1H result, reflecting continued strong growth in nutritional products For personal use only • First half a2 Platinum® performance includes sales build for key China selling events • Remaining agile in response to evolving market conditions for infant formula con
Slide 19: Disclaimer
Disclaimer This presentation dated 15 February 2017 has been prepared by The a2 Milk Company Limited (the Company) to provide a general overview of the Company. The information contained in this presentation should be read in conjunction with, and subject to, the Company’s FY17 Half Year Interim For
Slide 20: For personal use only
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