Synlait Milk Ltd. · NZX:SML
Synlait Milk — Investor Day (July 2019)
76 slides from Synlait Milk's investor day presentation, Jul 26, 2019
Slide 1: 2019 Investor Day
For personal use only 2019 Investor Day Synlait Milk Limited I PG 1
Slide 2: Disclaimer
I PG 2 DISCLAIMER Synlait Milk Limited For personal use only • This presentation is intended to constitute a summary of certain assumptions and should not be relied upon as an indication negligence) for any direct or indirect loss or damage which information about Synlait Milk Limited (“Synlait”). I
Slide 3: Agenda
I PG 3 AGENDA Synlait Milk Limited For personal use only • Farm tour (9.00am - 10.30am) • Plant tour – Liquid Milk / Blending and Canning (10.30am - 12.00pm) • Lunch (12.00pm - 12.30pm) • Management Presentations (12.30pm - 3.00pm) - Strategic Update – Leon Clement (Chief Executive Officer) - Supply
Slide 4: Strategic Update
I PG 4 Synlait Milk Limited For personal use only STRATEGIC UPDATE LEON CLEMENT CHIEF EXECUTIVE OFFICER
Slide 5: Leadership
I PG 5 Synlait Milk Limited For personal use only Our Leadership Team are highly LEADERSHIP skilled and committed to our vision and purpose. Leon Clement CHIEF EXECUTIVE OFFICER Chris France Nigel Greenwood Dr. Suzan Horst Martijn Jager Deborah Marris Hamish Reid Boyd Williams DIRECTOR, STRATEGY AND
Slide 6: Young, pioneering New Zealand-based company
I PG 6 Synlait Milk Limited For personal use only We are a young, pioneering New Zealand-based company that is shifting perceptions and driving $879.0m FY18 REVENUE ↑ 26% CAGR SINCE FY09 value through new thinking, and a new attitude. We harness New Zealand’s natural assets, and combine expert farmi
Slide 7: Our Purpose: Doing Milk Differently
I PG 7 OUR PURPOSE Synlait Milk Limited For personal use only DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD Being Different Essential Nutrition Sustainability Our company was born disruptive. It is this The milk nutrition products we People and planet underpin all we do. spirit that has driven our su
Slide 8: Doing Milk Differently
I PG 8 Synlait Milk Limited For personal use only DOING MILK • Significant opportunity with category size and growth: - Total size of global IN market = US$54.3 billion(1) DIFFERENTLY - - China growth: 16% CAGR over 10 years NZ exports have tripled in the past three years • Synlait is the largest ex
Slide 9: For a Healthier World
I PG 9 Synlait Milk Limited For personal use only • This is the problem of our age and we’re a big part of it FOR A • We are committed to changing our company and inspiring positive change: HEALTHIER - - Reducing greenhouse gas emissions on and off farm Eliminating water degradation WORLD - Incentiv
Slide 10: Purpose, Ambition, Strategy
I PG 10 Synlait Milk Limited For personal use only DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD HEART HEAD HANDS OUR PURPOSE OUR AMBITION OUR STRATEGY
Slide 11: Our Ambition: Doubling our business
I PG 11 OUR AMBITION = OUR FORMULA FOR SUCCESS Synlait Milk Limited For personal use only 2b in revenue Doubling our business 1b to 2b in 5 years
Slide 12: Our Ambition: Net positive impact
I PG 12 OUR AMBITION = OUR FORMULA FOR SUCCESS Synlait Milk Limited For personal use only Net +ve impact on planet and communities +ve place to grow with 100% engagement
Slide 13: Our Ambition: Zero injuries, defects, losses
I PG 13 OUR AMBITION = OUR FORMULA FOR SUCCESS Synlait Milk Limited For personal use only Zero injuries Zero defects Zero losses
Slide 14: Our Strategy
I PG 14 OUR STRATEGY Synlait Milk Limited For personal use only OUR GROWTH STRATEGY DOING MILK Sports Everyday Infant Foodservice Next DIFFERENTLY Nutrition Dairy Nutrition Big Thing OUR ENABLING STRATEGY Net Positive Build a World Class FOR A HEALTHIER WORLD for the Planet Healthier Value Chain Syn
Slide 15: Our Growth Strategy
I PG 15 OUR GROWTH STRATEGY Synlait Milk Limited For personal use only BRAND CONSUMER CAPTURE MORE OF THE VALUE Everyday Dairy Next Big Thing PROTEIN SKIM FAT MAXIMISE OUR Sports Infant Foodservice BUCKET OF MILK Nutrition Nutrition OPTIMISE ASSETS Ingredient Sales
Slide 16: Our Growth Strategy
I PG 16 OUR GROWTH STRATEGY Synlait Milk Limited For personal use only WANT CAN DO MUST DO CAN DO WANT TO DO TO DO Sports Everyday Infant Foodservice Next Nutrition Dairy Nutrition Big Thing
Slide 17: Our Strategy
I PG 17 OUR STRATEGY Synlait Milk Limited For personal use only OUR GROWTH STRATEGY DOING MILK Sports Everyday Infant Foodservice Next DIFFERENTLY Nutrition Dairy Nutrition Big Thing OUR ENABLING STRATEGY Net Positive Build a World Class FOR A HEALTHIER WORLD for the Planet Healthier Value Chain Syn
Slide 18: What Makes Us Different
I PG 18 WHAT MAKES US DIFFERENT Synlait Milk Limited For personal use only RESEARCH + CATEGORY DIFFERENTIATED DEVELOPMENT MILK SUPPLY - Dedicated R&D facility at Palmerston North - Milk streaming (A1 protein free milk, Grass FedTM, Lead With PrideTM) - Focus on innovating production FULL LOGISTICS S
Slide 19: Our Current Differentiators
I PG 19 OUR CURRENT DIFFERENTIATORS Synlait Milk Limited For personal use only 1 RESEARCH + CATEGORY DIFFERENTIATED DEVELOPMENT MILK SUPPLY - Dedicated R&D facility at Palmerston North - Milk streaming (A1 protein free milk, Grass FedTM, Lead With PrideTM) - Focus on innovating production FULL LOGIS
Slide 20: Our Future Differentiators
I PG 20 OUR FUTURE DIFFERENTIATORS Synlait Milk Limited For personal use only RESEARCH + CATEGORY DIFFERENTIATED DEVELOPMENT MILK SUPPLY - Dedicated R&D facility at Palmerston North - Milk streaming (A1 protein free milk, Grass FedTM, Lead With PrideTM) - Focus on innovating production FULL LOGISTIC
Slide 21: Purpose, Ambition, Strategy
I PG 21 Synlait Milk Limited For personal use only DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD HEART HEAD HANDS OUR PURPOSE OUR AMBITION OUR STRATEGY
Slide 22: Track Record of Successful Asset Builds
I PG 22 TRACK RECORD OF SUCCESSFUL ASSET BUILDS Synlait Milk Limited For personal use only NZ$ millions Net Operating Assets and Gearing Net Debt / EBITDA 600 12.0x After a period of consolidation, our strong balance sheet has facilitated 493.3 500 10.0x our second major growth phase. 455.2 423.5 We
Slide 23: Pokeno Update
I PG 23 POKENO UPDATE Synlait Milk Limited For personal use only • In February 2018 Synlait announced the conditional purchase of 28 hectares of land in Pokeno to establish its second nutritional powder manufacturing site. • In November 2018 the High Court removed covenants over the land which would
Slide 24: Supply Chain
I PG 24 Synlait Milk Limited For personal use only SUPPLY CHAIN ROB STOWELL GENERAL MANAGER, SUPPLY CHAIN
Slide 25: Plan
I PG 25 PLAN Synlait Milk Limited For personal use only Proven ability to build our value chain ahead of customer Historical Production and Milk Supply demand curve and optimise our manufacturing assets MT kgMS (millions) 160,000 80 • Investments ahead of the curve in: - Categories and customer stra
Slide 26: Source
I PG 26 SOURCE Synlait Milk Limited For personal use only Our differentiated milk supply and procurement functions give Synlait a big edge and enable us to manufacture specialty products with a higher value, starting behind the farm gate • Expanded Procurement and Milk Supply teams managing rapid gr
Slide 27: Source: Pokeno milk supply
I PG 27 SOURCE Synlait Milk Limited For personal use only The successful Pokeno milk supply set-up was our first important step into the North Island market • Volume in-line with targets • 56 farms and ~11m kgMS contracted • High quality farmers • Farms must be Lead With PrideTM Certified within thr
Slide 28: Deliver
I PG 28 DELIVER Synlait Milk Limited For personal use only Our customers are demanding shorter lead-times, SALES BY GEOGRAPHIC REGION greater product security and traceability • Strategy is to create sticky relationships with customers through a single point of contact for logistics services includi
Slide 29: Manufacturing Excellence
I PG 29 Synlait Milk Limited For personal use only MANUFACTURING EXCELLENCE ANTONY MOESS GENERAL MANAGER, MANUFACTURING
Slide 30: Make
I PG 30 MAKE Synlait Milk Limited For personal use only Integrated Work Systems (IWS) driving manufacturing efficiencies which allowed 12.4% more milk to be processed off the same asset base in H1 FY19 - 5% increase in dryer availability 2018/2019 - 5% increase in dryer speed 2018/2019 - Canning lin
Slide 31: Asset Construction
I PG 31 ASSET CONSTRUCTION Synlait Milk Limited For personal use only ~$1 billion of assets built / purchased EXCELLENCE ACROSS A RANGE OF MANUFACTURING PROCESSES AND ASSETS over 12 years • IBP process drives capital plan - New opportunities - Risk management Infant Nutrition WETMIX KITCHENS CONSUME
Slide 32: Exploring New Categories with Everyday Dairy Expansion
I PG 32 EXPLORING NEW CATEGORIES WITH EVERYDAY DAIRY EXPANSION Synlait Milk Limited For personal use only Liquid Milk Plant • Construction executed at speed and on time • Supply commenced in early April 2019 • 10-year minimum term contract as exclusive supplier of private label product range • World
Slide 33: Pokeno
I PG 33 POKENO Synlait Milk Limited For personal use only • Third 10 MT/hour dryer from TetraPak for consistency of product • Staff recruited and now training at Dunsandel • Still targeting first milk in early September • Project remains on budget • Excited to be part of Pokeno community and the reg
Slide 34: Quality and Regulatory
I PG 34 Synlait Milk Limited For personal use only QUALITY AND REGULATORY DR. SUZAN HORST DIRECTOR, QUALITY REGULATORY AND LABORATORY SERVICES
Slide 35: Synlait Quality Purpose
I PG 35 SYNLAIT QUALITY PURPOSE Synlait Milk Limited For personal use only • Creating value for consumers and customers by offering an attractive range of high quality and safe dairy products • Combining agility in innovation and execution, with reliable high quality and safety • Ensure that all pro
Slide 36: Quality by Design
I PG 36 QUALITY BY DESIGN Synlait Milk Limited For personal use only You cannot inspect quality into a product, it has to be ‘built in’ • ‘Built in’ quality is even more important for fresh liquid products • End product testing is important for compliance and trust, but Right First Time manufacturin
Slide 37: Quality
I PG 37 QUALITY Synlait Milk Limited For personal use only The key areas that we focus on every day at every site: • Compliance – NZ regulations, China GB regulations, China OMAR and customer specific requirements • Meeting the expectations of our customers and consumers • Ensuring the hygienic stat
Slide 38: In-House Laboratory
I PG 38 IN-HOUSE LABORATORY Synlait Milk Limited For personal use only We perform over 500.000 tests a year, on raw materials, final products, during processing and on the manufacturing environment (hygiene swabbing) • Synlait has a dedicated chemistry laboratory, a microbiology laboratory, and in-p
Slide 39: New Zealand Regulatory Model
I PG 39 NEW ZEALAND REGULATORY MODEL Synlait Milk Limited For personal use only Infant Formula is the most regulated food product in the world – it is the only food provided to some infants in their first months of life Regulator New Zealand’s Food Safety Authority Set standards (Government) • All i
Slide 40: International Registrations
I PG 40 INTERNATIONAL REGISTRATIONS Synlait Milk Limited For personal use only We remain committed to our globally diversified portfolio of Infant Nutrition brands as they undertake China / U.S. regulatory approvals • Regulatory team includes dedicated staff at our office in Beijing and Shanghai who
Slide 41: Business Development and Innovation
I PG 41 Synlait Milk Limited For personal use only BUSINESS DEVELOPMENT AND INNOVATION MARTIJN JAGER DIRECTOR, SALES AND BUSINESS DEVELOPMENT
Slide 42: Infant Nutrition
I PG 42 INFANT NUTRITION Infant Synlait Milk Limited Nutrition For personal use only Top 10 Countries by Value Share Million USD CAGR China is expected to remain one of the fastest growing 20,000 14% 13% Infant Nutrition markets globally 18,000 • Continued commitment to support the a2 Milk 12% Compa
Slide 43: Foodservice
I PG 43 FOODSERVICE Foodservice Synlait Milk Limited For personal use only Targeted and phased approach to NPD with selected China: Food Service by Type (Value) 2013-2023 go-to-market partners 2018-2023 FCST CAGR 5.1% 898 854 810 • Large, traditional market leaders, channels and models 2013-2018 ACT
Slide 44: Everyday Dairy
I PG 44 EVERYDAY DAIRY Everyday Synlait Milk Limited Dairy For personal use only Attractive profitable, scalable opportunities • FSSI liquid milk and cream contract underwrites new capability, Talbot Forest Cheese optimises supply chain, and Palmerston North liquid capability supports innovation • L
Slide 45: Sports Nutrition
I PG 45 SPORTS NUTRITION Sports Synlait Milk Limited Nutrition For personal use only Global Sports Nutrition Market Retail Value USD Billions Targeted approach to previously identified $30.0 10.4% Forecast Growth Adult Nutrition category $25.0 • Fragmented, growing (10.4% forecast CAGR), $20.0 profi
Slide 46: Next Big Thing
I PG 46 NEXT BIG THING Next Synlait Milk Limited Big Thing For personal use only New opportunities emerging outside the four growth pathways • Continually monitoring early changes in consumer behavior, science, technology, new channels, models, and investment opportunities • Capture position by test
Slide 47: Innovation and Technical
I PG 47 INNOVATION AND TECHNICAL Synlait Milk Limited For personal use only Scope includes new product development (farm to consumer), new technology and process development, sales support, operations support • Technical team grew from 32 to 47 in FY19 • Six managers have average experience of 24 ye
Slide 48: Synlait Liquid Development Centre and Pilot Plant
I PG 48 SYNLAIT LIQUID DEVELOPMENT CENTRE AND PILOT PLANT PALMERSTON NORTH Synlait Milk Limited For personal use only • Team grew from 5 to 11 in FY19 • Synlait pilot plant ‘Syndi’ commissioned in October 2018 has already tested 39 new products and conducted 4 trials • Access to largest and best equ
Slide 49: Sustainable Value Chain
I PG 49 Synlait Milk Limited For personal use only SUSTAINABLE VALUE CHAIN HAMISH REID DIRECTOR, SUSTAINABILITY AND BRAND
Slide 50: Synlait's Pivot
For personal use only SY NL A IT ’S PI V OT Synlait Milk Limited I PG 50
Slide 51: We're Taking a Stand
For personal use only W E’RE TA K I N G A STA N D Synlait Milk Limited I PG 51
Slide 52: Living Well Within the Boundaries of Our Planet
I PG 52 Synlait Milk Limited For personal use only LI V I N G WE L L WI T H I N TH E BO UN DA RI E S OF OU R PL AN E T
Slide 53: For personal use only
For personal use only Synlait Milk Limited I PG 53
Slide 54: Doing Milk Differently for a Healthier World
For personal use only DOING MILK HEALTHIER WORLD DIFFERENTLY FOR A Synlait Milk Limited I PG 54
Slide 55: Environment, People, Enterprise
I PG 55 Synlait Milk Limited For personal use only ENVIRONMENT DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD ENTERPRISE PEOPLE
Slide 56: Environment
I PG 56 Synlait Milk Limited Environment For personal use only Synlait’s net business impact is positive for the planet. Regenerative agriculture, manufacturing + supply chain. ENVIRONMENT DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD ENTERPRISE PEOPLE People Enterprise Creating opportunities for all
Slide 57: Sustainability focus areas
I PG 57 Synlait Milk Limited For personal use only CIRCULAR WELFARE ECONOMY WATER ENVIRONMENT CLIMATE DOING MILK SUSTAINABLE SUPPLY DIFFERENTLY FOR A HEALTHIER WORLD CULTURE AND COMMUNITY SAFE FOOD ENTERPRISE PEOPLE TRANSPARENCY CAPABILITY SAFE HEALTHY WORKPLACE FARMING
Slide 58: Synlait GHG Inventory FY18
I PG 58 Synlait Milk Limited For personal use only Synlait GHG Inventory FY18 912k tonnes CO2-e 83% On-Farm 12% Coal 3% Freight 2% Other
Slide 59: Synlait GHG Inventory FY18 (excluding farms)
I PG 59 Synlait Milk Limited For personal use only Synlait GHG Inventory FY18 (excluding farms) 157k tonnes CO2-e 69% Coal 20% Freight 5% Electricity 4% Transport 2% Other
Slide 60: Boost to Lead With Pride
For personal use only B O OST TO LE A D WI T H PRI D E TM Synlait Milk Limited I PG 60
Slide 61: Installed NZ's First Electrode Boiler
I PG 61 Synlait Milk Limited For personal use only I NS TA L L E D NZ’S FI RST E L E C TROD E BO I L E R
Slide 62: Climate
For personal use only C LI MATE Synlait Milk Limited I PG 62
Slide 63: On-Farm Initiatives
I PG 63 ON-FARM INITIATIVES (-35% PER KGMS BY 2028) Synlait Milk Limited For personal use only 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Slide 64: Off-Farm Initiatives
I PG 64 OFF-FARM INITIATIVES (-50% PER KG PRODUCTION BY 2028) Synlait Milk Limited For personal use only 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Slide 65: Water
For personal use only WATER Synlait Milk Limited I PG 65
Slide 66: On Farm N-Loss
For personal use only 100,000 0 20,000 40,000 60,000 80,000 120,000 2018 2019 2020 2021 2022 2023 2024 ON FARM N-LOSS 2025 (-45% PER KGMS BY 2028) 2026 2027 2028 Synlait Milk Limited I PG 66
Slide 67: Culture & Community
For personal use only CU LT U RE & COMMU NI T Y Synlait Milk Limited I PG 67
Slide 68: For personal use only
For personal use only Synlait Milk Limited I PG 68
Slide 69: Transparency
For personal use only T RA NS PA RE N CY Synlait Milk Limited I PG 69
Slide 70: For personal use only
For personal use only Synlait Milk Limited I PG 70
Slide 71: For personal use only
For personal use only Synlait Milk Limited I PG 71
Slide 72: Living Well Within the Boundaries of Our Planet
I PG 72 Synlait Milk Limited For personal use only L I V I N G WEL L WI T H I N TH E BO UN DA RI E S OF OU R PL AN E T
Slide 73: Closing Remarks
For personal use only CHAIRMAN GRAEME MILNE CLOSING REMARKS Synlait Milk Limited I PG 73
Slide 74: Dairy Industry Dynamics
I PG 74 DAIRY INDUSTRY DYNAMICS Synlait Milk Limited For personal use only • Greenhouse Gas (GHG) footprint – on farm, transportation and processing • Water quality and nitrate leaching • Zero Carbon Bill and pricing of agricultural emissions • Trends in overall New Zealand milk pool • Dairy Industr
Slide 75: Closing Remarks
I PG 75 CLOSING REMARKS Synlait Milk Limited For personal use only • Synlait’s competitive advantage lies in its full service offering to customers • We are a young, pioneering New Zealand-based company that is shifting perceptions and driving value through new thinking, and a new attitude • We harn
Slide 76: Thank You
I PG 76 Synlait Milk Limited For personal use only DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD Thank You