A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — FY2019 Earnings Presentation
25 slides from A2 Milk's earnings presentation, Aug 21, 2019
Slide 1: Stepping it up. 2019 Annual Results
For personal use only Stepping it up. The a2 Milk Company Limited 2019 Annual Results | 21 August 2019
Slide 2: Contents
For personal use only CONTENTS Result highlights 3 Strategic progress 9 Regional performance 12 Outlook 17 Appendix 19
Slide 3: Results highlights: A record year
For personal use only R E S U LT S H I G H L I G H T S A record year.
Slide 4: Record financial results and market shares; step-changing investment
Record financial results and market shares; step-changing investment in brand and capability for further growth For personal use only Record financial results in FY19, continuing strong momentum • Total revenue of $1,304.5 million1 +41.4% • EBITDA2 of $413.6 million +46.1% • Net profit after tax of
Slide 5: Key financial charts – continuing strong momentum
Key financial charts1 – continuing strong momentum For personal use only Group revenue (NZ$ million) Group EBITDA2 (NZ$ million) Basic earnings per share (cents) 1,304.5 413.6 39.3 922.7 691.4 27.0 283.0 195.2 549.5 488.0 140.0 352.8 12.7 293.4 141.2 613.1 218.4 213.6 54.6 77.1 4.4 434.7 143.0 256.1
Slide 6: Financial summary – strong earnings growth and step-change investment
Financial summary – strong earnings growth and step-change investment in marketing and capability For personal use only NZ$ million FY19 FY18 % change Revenue 1,304.5 922.7 +41% • Reflects strong growth across core markets and product categories Gross margin 713.8 464.3 +54% • GM of 54.7% reflects b
Slide 7: Strong balance sheet with substantial cash balance
Strong balance sheet with substantial cash balance For personal use only • Working capital movements include steps taken to improve business flexibility by increasing inventory, enabling us to adjust more quickly to demand changes; offset by +287.7 (6.6) (3.4) (162.3) 464.8 improved receivables and
Slide 8: Geographic and product segment performance
Geographic and product segment performance For personal use only Geographic segment revenue & EBITDA Product segment revenue China & Total Liquid Infant Other NZ$ million ANZ USA UK1 Corporate other Asia Group milk nutrition nutritional Revenue 842.7 405.7 34.6 21.6 - 1,304.5 174.9 1,063.8 65.8 FY19
Slide 9: Strategic progress: Building a sustainable future
For personal use only S T R AT E G I C P R O G R E S S Building a sustainable future.
Slide 10: Macro factors shaping consumer demand and creating opportunity
Macro factors shaping consumer demand and creating opportunity For personal use only Growing consumer Growing focus on Rise of the demand for food safety, Rapid pace of middle class health and naturalness digitalisation in Asia wellness products and provenance 2019 Annual Results | 10
Slide 11: How we create value depends on success across each source of capital
How we create value depends on success across each source of capital given the inter-connected nature of our business model For personal use only Unique, Passionate and Capital Innovative and Responsible use Enriching premium brand thriving smart ethical of natural community and IP team approach sup
Slide 12: Regional performance
For personal use only REGION AL PERFORM ANC E Australia strengthens; China & US momentum builds.
Slide 13: Australia and New Zealand goes from strength to strength
Australia and New Zealand goes from strength to strength For personal use only • Continued strong performance across all key product segments: liquid milk, infant formula and other nutritional products with strong underlying brand health ANZ segment revenue • a2 Milk™ branded fresh milk continues to
Slide 14: China momentum continues to build
China momentum continues to build For personal use only • Infant formula consumption market share growing across China ― 6.4% Kantar Tier 1, Key A, B, C & D cities market value share up from 4.8% as at 30 June 181 China and other Asia • Invested in expanded Kantar market share coverage to include ci
Slide 15: United States building scale
United States building scale For personal use only • a2 Milk™ building sales velocities ― Revenue up 160.7% to NZ$34.6 million ― EBITDA losses of NZ$44.0 million resulting from increased investment in building brand awareness • Distribution increased to 13,100 stores (Jun 19) ― Rate of distribution
Slide 16: Growth of UK liquid milk remains challenging
Growth of UK liquid milk remains challenging For personal use only • We have made the decision to exit our UK liquid milk operations, we believe there is significant value to be realised by consolidating our market focus and strengthening our presence in our core regions of China and US • The busine
Slide 17: Outlook: Continued growth and investment in China & US
For personal use only OUTLOOK Continued growth and investment in China & US.
Slide 18: FY20 outlook
FY20 outlook For personal use only • We anticipate continued growth in revenue across our key regions supported by increasing brand and marketing investment in China and the US • Full year FY20 EBITDA as a percentage of sales is expected to be broadly consistent with 2H19 EBITDA margin (28.2%) refle
Slide 19: Appendix
For personal use only APPENDIX
Slide 20: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures For personal use only NZ$ million FY19 FY18 Australia & New Zealand segment EBITDA 388.2 262.2 China & other Asia segment EBITDA 123.9 81.3 USA segment EBITDA (44.0) (28.6) UK segment EBITDA 4.4 0.9 Corporate EBITDA (58.9) (32.7) EBITDA1 413.6 283.0 Depreciation/a
Slide 21: Geographic and product segment performance
Geographic and product segment performance For personal use only Geographic and product segment revenue China & Total NZ$ million ANZ USA UK1 other Asia Group 1 UK liquid milk sales on a like-for-like basis is up 8.9% - this is in constant currency and excludes the impact of certain trade marketing
Slide 22: China regulatory environment
China regulatory environment For personal use only • A number of important regulatory changes were introduced during the year with respect to e-commerce and cross border trade in general. This included a new e-commerce law and a new CBEC policy framework containing implementation guidance for future
Slide 23: Our integrated approach to being a responsible company
Our integrated approach to being a responsible company in the wider world we operate in For personal use only • The interrelationship between our macro consumer factors and our business strategy determines our ability to create and sustain value • As we grow, we are focused on having a positive impa
Slide 24: Disclaimer
Disclaimer For personal use only This presentation dated 21 August 2019 provides additional comment on the Annual Report for the 12 months ended 30 June 2019 of The a2 Milk Company Limited (the “Company” or “a2MC”) and accompanying information released to the market on the same date. As such, it sho
Slide 25: For personal use only
For personal use only t h e a 2 m i l kc o m p a n y. c o m