Australian Dairy Nutritionals Limited · ASX:AHF
Australian Dairy Nutritionals — Australian Dairy Farms Group — Monsoon Communications Twilight Investor Briefing (November 2018)
32 slides from Australian Dairy Nutritionals's conference presentation, Nov 28, 2018
Slide 1: Investor Presentation
Australian Dairy Farms Group 28 November 2018 ASX Code: AHF Investor Presentation Attached is a presentation which Peter Skene, Chief Executive Officer of Australian Dairy For personal use only Farms Group (AHF) presented at the Monsoon Communications Twilight Investor Briefing at 4:30pm yesterday a
Slide 2: Twilight Briefing
Australian Dairy Farms Group (ASX:AHF) Twilight Briefing For personal use only 27th November 2018 Presenter – Peter Skene CEO Australian Dairy Farms Group Australian Dairy Farms Group 1 Australian Dairy Farms, the new fresh future
Slide 3: Disclaimer
Disclaimer Commercial in Confidence For personal use only This Presentation contains general information only and is, or is based upon, information which has been released to ASX. This document is not an invitation, offer or recommendation (express or implied) to apply for or purchase or take any ot
Slide 4: Overview
For personal use only Overview Australian Dairy Farms Group 3 Australian Dairy Farms, the new fresh future
Slide 5: History of Australian Dairy Farms
History of Australian Dairy Farms For personal use only December 2015 March 2018 August 2018 July 2017 Acquired milk Announced plans to Entering the formula Strategic overview processor & convert farms to market with the December 2014 released outlining manufacturer organic production acquisition of
Slide 6: Overview of Australian Dairy Farms
Overview of Australian Dairy Farms For personal use only VictorianSouth West Dairy Region GoldenTriangleof the South West Victoria DairyRegion VerticalIntegration AHFFarms–Transitioning to organic AHF Processing facility AHFNew processing facility Australian Dairy Farms Group 5 Australian Dairy Farm
Slide 7: Current Business Structure
Current Business Structure For personal use only Australian Dairy Farms Group are currently a vertically integrated producer and processor of own brand and contract manufactured dairy products. Milk Own Brands Yoghurts Butter Farms Processing Facility Milk Contract Packing Yoghurts Kefir Australian
Slide 8: Current Core Assets
For personal use only Current Core Assets Our farms • Australian Dairy Farms Group currently owns 6 farms producing 17 million litres of milk per year • AHF owned farms are in the process of converting to organic milk production • Once complete this transition will enable AHF to become Australia’s l
Slide 9: Future Business Structure
Future Business Structure For personal use only Future business structure will include a broad suite of differentiated nutritional products including a “tummy health” and organic infant formula range Nutritionals New processing Farms facility Own Brands Contract Packing Australian Dairy Farms Group
Slide 10: Diversifying and Introducing Higher Margin Products
Diversifying and Introducing Higher Margin Products Processing capabilities existing and aspirational For personal use only 2016 2017 2018 2019 2020 Milk Milk Milk Milk Milk Butter Butter Butter Butter Butter Yoghurt Yoghurt Yoghurt Yoghurt Yoghurt Kefir Kefir Kefir Cream Cultured Drinks Cream Cultu
Slide 11: Growing Branded Products
Growing Branded Products Australian Dairy Farm Group is transitioning from a conventional basic producer of low value products, to For personal use only a premium differentiated branded business 2015 2018 2021 Own Brand Contract Packing Own Brand Contract Packing Own Brand Contract Packing Australia
Slide 12: Strategy
For personal use only Strategy Australian Dairy Farms Group 11 Australian Dairy Farms, the new fresh future
Slide 13: Strategic Overview
Strategic Overview For personal use only - Transitioning from a contract manufacturer and packer to brand owner - Converting farm assets from 6 of over 5,000 conventional dairy farms into Australia’s largest single entity ORGANIC in conversion dairy enterprise - Moving from highly competitive low va
Slide 14: Strategy – Repositioning the Company
Strategy – Repositioning the Company For personal use only Transformational shift from farms and raw milk processing to highly differentiated dairy and nutritional products focussing on “tummy health” ranges and organic infant formulas • Higher barriers to entry • Fewer competitors • Higher growth •
Slide 15: Strategy – Entering the Nutritionals/Formula Market
Strategy – Entering the Nutritionals/Formula Market For personal use only • Acquisition of Flahey's Nutritionals is our most recent step (purchase completes December 2018) • Flahey's Nutritionals recently launched into the Australian Certified Organic market via a specialised ultra premium product c
Slide 16: Current and Future Revenue
Current and Future Revenue Current Revenue Sources Future Revenue Sources For personal use only • 6 farms producing 17 million litres of milk per annum • Organic dairy farms Farms • Segregated herds, comprising Farms • Segregated herds, comprising Holstein / Fresian and Jersey Herds Holstein / Fresi
Slide 17: Nutritionals
For personal use only Nutritionals Australian Dairy Farms Group 16 Australian Dairy Farms, the new fresh future
Slide 18: Shift to Nutritionals (indicative)
Shift to Nutritionals (indicative) Australian Dairy Farms are moving up the value chain to be a manufacturer of high value speciality For personal use only products 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2015 2016 2017 2018 2019 2020 2021 Projected category value splits Bottle Milk Yoghurts For
Slide 19: Organic Baby Formula Sales Growth
For personal use only Organic Baby Formula Sales Growth Global organic baby formula retail sales value (constant price) in millions CAGR USD1,000 20% growth per 850 800 758 annum over last 697 38% Other 5 years 600 576 52% 57% 6% EarthsBest 414 400 16% Bellamy’s 355 62% 286 291 307 6% 52% 45% 7% 9%
Slide 20: Value of ANZ Organic Infant formula market: 2017-2023
Value of ANZ Organic Infant formula market: 2017 -2023 For personal use only Market value expected to double in next 5 years to USD$400 million Source: ‘Market Research Future’ - Global Organic Infant Formula Report Australian Dairy Farms Group 19 Australian Dairy Farms, the new fresh future
Slide 21: Chinese Infant formula sales
For personal use only Chinese Infant formula sales Chinese infant formula sales growing at 9% pa ORGANIC Chinese infant formula sales growing at 46% pa Source: Citi Infant formula report Australian Dairy Farms Group 20 Australian Dairy Farms, the new fresh future
Slide 22: Strategy – Planning for the future
Strategy – Planning for the future AUSTRALIAN DAIRY FARMS Layout plan for Camperdown Dairy Park (new factory site) For personal use only Australian Dairy Farms Group 21 Australian Dairy Farms, the new fresh future
Slide 23: Strategy – From milk to Infant Formula
Strategy – From milk to Infant Formula (all in Western Vic) AUSTRALIAN DAIRY FARMS Typical powder drying process line For personal use only Option 2 – Skim Milk Powder, Whole Milk Powder and Full Range Infant Formula from Wet Blend Australian Dairy Farms Group 22 Australian Dairy Farms, the new fres
Slide 24: Strategy – Infant formula / Nutritionals plant
Strategy – Infant formula / Nutritionals plant For personal use only Australian Dairy Farms Group 23 Australian Dairy Farms, the new fresh future
Slide 25: Nutritionals Indicative Pipeline
Nutritionals Indicative Pipeline • Entered the nutritionals segment through the acquisition of Flahey’s Nutritionals (to complete Dec 2018) For personal use only • Plans to expand the range to Tummy Health, Australian Organic and Adult Nutrition by 2020 • Focus on differentiated products Current pro
Slide 26: Focus on full integration
Focus on full integration For personal use only Turnover Infant Vertical Market Cap Market Cap / Organic Branded FY18e Formula Integration (A$m) Turnover (A$m) Bellamy’s Australia × 1,168.3 353.8 3.3x The A2 Milk Company × × 8,142.1 1266.3 6.4x Wattle health × 258.7 0.9* 278.6x Bubs
Slide 27: Appendix
For personal use only Appendix Australian Dairy Farms Group 26 Australian Dairy Farms, the new fresh future
Slide 28: Organic Dairy Market
Organic Dairy Market For personal use only Market The domestic dairy industry revenue is expected to grow at an annualised rate of 8.5% to reach a market value of $2.6 Billion The market for organic infant formula in Australia and New Zealand is expected to grow from $230m in 2017, to $546m by 2023.
Slide 29: Organic Dairy Market
Organic Dairy Market For personal use only Challenges Numerous challenges have developed in the domestic dairy market, including supermarket milk price wars and falling domestic milk prices due to declining global dairy trade prices Market Opportunities • Retailers and restaurants are stocking an in
Slide 30: Organic Dairy Market Opportunity
Organic Dairy Market Opportunity Top Perceived ‘Free From’ Benefits of Organic Food* Australia’s Top 12 Perceived Benefits* of Organic Food For personal use only 83% CHEMICAL FREE 46% CRUELTY 75% ADDITIVE FREE PERCEIVED FREE BENEFITS 57% 58% NON HORMONE & GMO ANTIBIOTIC FREE THE TOP PERCEIVED BENEFI
Slide 31: Further Details
Further Details For additional company information or media enquiry matters please contact: Peter Skene For personal use only Group CEO/ Director Australian Dairy Farms Limited Email: shareholders@adfl.com.au About Australian Dairy Farms Group Disclaimer – Forward Looking Statements Australian Dairy
Slide 32: Further Details
Further Details For additional company information or media enquiries, please contact: Australian Dairy Farms Limited Phone: +61 7 3020 3060 For personal use only Email: shareholders@adfl.com.au (emails are forwarded to the relevant person) Communications Policy AHF makes ASX market releases at time