Comvita Limited · NZX:CVT
Comvita — H1 FY2024 Earnings Presentation
62 slides from Comvita's earnings presentation, Feb 21, 2024
Slide 1: Investor Presentation Half Year Results FY24
PRESENTED BY: INVESTOR PRESENTATION David Banfield, CEO HALF YEAR RESULTS FY24 Nigel Greenwood, CFO 21 FEBRUARY 2024 Poised F O R TA K E - O F F
Slide 2: Important Notice
I M P O R TA N T Notice This presentation is given on behalf of Comvita Limited. Comvita’s audited financial statements. We monitor • Is for general information purposes only and does not Information in this presentation: these non-GAAP measures as key performance constitute investment advice. indic
Slide 3: Key Messages
OUR HY24 Key Messages • Interim results are consistent with Comvita’s trading updated dated 1st February 2024 • Recent guidance changes for H2-24 factor in lower consumer spending in China and the loss of some distribution with one customer in North America • Early signs of improvement in China duri
Slide 4: Recent Guidance Changes
OUR HY24 Recent Guidance Changes February trading and guidance update • Mainland China – FY24 1H revenue was $33M, down 19% on PCP. Driven by macro-economic weakness, impacting the premium consumer category. Sales in Mainland China are showing improvement towards a more stable trading pattern • Nort
Slide 5: Focus on Greater China
FOCUS ON Greater China • Revenue challenges in mainland China due to broader macro economic issues • 11.6% CAGR 2019 to 2024 • Signs of improvement between quarters (Q1 and Q2) and in January, Q2 flat with Q2 FY22 • Hong Kong SAR reporting single digit improvement vs PCP • Market share remains stron
Slide 6: Targeting $50M EBITDA 2025 (20%)
TA R G E T I N G $50M EBITDA 2025 (20%) COMVITA 50:2025 60 : 15 : 20 MINIMUM 60% GP 15% MARKETING TO SALES RATIO 20% EBITDA TARGET Gross Profit (%) Marketing Investment (%) EBITDA excl ERP cost (%) FY24 Forecast (mid point) FY24 Forecast (mid point) FY24 Forecast (mid point) 70% 16% 16% 60% 14% 14%
Slide 7: Financials
SECTION GROWING SHARE IN FOCUS MARKETS Financials
Slide 8: Financial Summary
OUR HY24 Financial Summary • Interim revenue $103.4M ( -7.8% vs PCP) • HoneyWorld revenue $6.8M • GP 60% or $62.2M -170 bps vs PCP in line with our plan • Marketing investment $14M or 13.5% to sales • ERP and transformation investment $4.4M • EBITDA excl ERP $9.5M -32% vs PCP • NPAT -$3.2M vs $4.2M
Slide 9: Financial Key Results: Income Statement
K E Y R E S U LT S Financial I N C O M E S TAT E M E N T For the year ended 31 December 31 December NZD 000s 2023 2022 Variance $ Variance % • Revenue decreased -7.8% vs PCP Revenue 103,365 112,130 (8,765) (7.8%) • GP% down 1.7% vs PCP due to gains of $3M in Gross Profit 62,176 69,380 (7,204) (10.4%
Slide 10: Financial Key Results: Balance Sheet
K E Y R E S U LT S FinancialBALANCE SHEET As at 31 31 NZD 000s December December 2023 2022 Variance $ • Net debt $85.8M – up $22.5M or +35.6% on Net Debt 85,816 63,279 22,537 PCP Operating Cashflow (6,110) (18,606) 12,496 • HoneyWorld acquisition and Apiter Inventory 143,405 145,844 (2,439) investme
Slide 11: Inventory
Inventory As at 31 31 NZD 000s December December 2023 2022 Variance $ • While inventory has decreased by $2.4M vs PCP it Raw Materials 68,892 89,006 (20,114) remains at elevated levels Work in Progress 4,514 4,011 503 • Raw materials decreased by $20.1M reflecting the Finished Goods 69,999 52,827 17
Slide 12: Cashflow
Cashflow For the year ended 31 31 NZD 000s December December 2023 2022 Variance $ • Operating cashflow (-$6.1M), $12.5M Operating cash inflow (6,110) (18,606) 12,496 improvement on prior year: Investing activities (17,188) (12,202) (4,986) • Predominantly impacted by increase in Financing activities
Slide 13: FY24 Interim Dividend
FY24 Interim Dividend • Directors have declared a fully imputed interim dividend of 1 cps • Reflecting the softer first half trading • Comvita remains committed to balancing shareholder distributions with prudent capital management • The board will review our full year dividend in August • Record da
Slide 14: ERP on Track
KEY PROJECT ERP on Track FY24 HY24 investment $3.4M (included in this result) • Upgrade of existing ERP system to latest version – re-implementation • On track to complete June FY24 latest, • Total FY24 investment of $7M • Reviews and updates: • Master data • End to end processes • Ways of working B
Slide 15: Market Segments
SECTION Market Segments GROWING SHARE IN FOCUS MARKETS
Slide 16: Segment Performance
HY24 Segment Performance Revenue and contribution performance – segments in HY24 • Revenue -$8.8M or -7.8% vs PCP • Greater China revenue drop impacted by broader economic challenges / consumer spending − Greater China revenue -$6.9M or -13.3% − Contribution dropped in line with sales − Mainland Chi
Slide 17: Greater China
GREATER CHINA ON A REPORTED CURRENCY BASIS – FOR 6 MONTHS ENDED DEC 23 This Year Last Year Vs. Vs. NZD 000s Dec-23 Dec-22 Last Year Last Year % Sales 45,007 51,916 (6,909) (13.3%) Net Contribution 8,482 13,066 (4,584) (35.1%) Net Contribution % 18.8% 25.2% (6.3%) • Revenue down -13.3% or -$6.9M in f
Slide 18: Greater China Growth
EXCITING FUTURE Greater China GROWTH HALF 1 FY19 FY24 SALES $26M $45M FULL YEAR FY19 FY24 SALES $77M $99M • H1 revenue -13.3 % vs PCP • H2 forecast revenue -5% to -10% vs PCP • FY24 forecast revenue -7.5% to -11.5% vs PCP COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 18
Slide 19: North America
NORTH AMERICA ON A REPORTED CURRENCY BASIS – FOR 6 MONTHS ENDED DEC 23 This Year Last Year Vs. Vs. NZD 000s Dec-23 Dec-22 Last Year Last Year % Sales 13,029 20,699 (7,669) (37.1%) Net Contribution 2,298 6,977 (4,679) (67.1%) Net Contribution % 17.6% 33.7% (16.1%) • Total revenue of $13M is down $7.7
Slide 20: North America Growth
EXCITING FUTURE North America GROWTH HALF 1 FY19 FY24 SALES $8M $13M FULL YEAR FY19 FY24 SALES $13M $26M • H1 revenue -37.1% vs PCP • H2 forecast revenue -10% to -15% vs PCP • FY24 forecast revenue -25% to -30% vs PCP COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 20
Slide 21: Rest of Asia
REST OF ASIA ON A REPORTED CURRENCY BASIS – FOR 6 MONTHS ENDED DEC 23 This Year Last Year Vs. Vs. NZD 000s Dec-23 Dec-22 Last Year Last Year % Sales 19,213 12,925 6,288 48.7% Net Contribution 2,600 3,314 (714) (21.5%) Net Contribution % 13.5% 25.6% (12.1%) • Strong sales growth +49% vs PCP to $19.2M
Slide 22: Rest of Asia Growth
EXCITING FUTURE Rest Of Asia GROWTH HALF 1 FY19 FY24 $9M $19M FULL YEAR FY19 FY24 $17M $45M • H1 revenue +48.7% vs PCP • H2 forecast revenue +32% to +38% vs PCP • FY24 forecast revenue +40% to +45% vs PCP • On track to become second biggest segment COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24
Slide 23: Australia + New Zealand
AUSTRALIA + NEW ZEALAND ON A REPORTED CURRENCY BASIS – FOR 6 MONTHS ENDED DEC 23 This Year Last Year Vs. Vs. NZD 000s Dec-23 Dec-22 Last Year Last Year % Sales 19,255 18,074 1,181 6.5% Net Contribution 6,216 6,326 (110) (1.7%) Net Contribution % 32.3% 35.0% (2.7%) • Revenue $19.3M +6.5% vs PCP • Chi
Slide 24: ANZ Growth
EXCITING FUTURE ANZ GROWTH HALF 1 FY19 FY24 $30M $19M FULL YEAR FY19 FY24 $62M $44M • H1 revenue +6.5% vs PCP • H2 forecast revenue +7.5% to +12.5% vs PCP • FY24 forecast revenue +6% to +11% vs PCP COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 24
Slide 25: EMEA
EMEA ON A REPORTED CURRENCY BASIS – FOR 6 MONTHS ENDED DEC 23 This Year Last Year Vs. Vs. NZD 000s Dec-23 Dec-22 Last Year Last Year % Sales 2,159 2,530 (371) (14.7%) Net Contribution (36) 7 (43) (589.3%) Net Contribution % (1.7%) 0.3% (2.0%) • $2.2M revenue -14.7% vs PCP • Segment remains subscale
Slide 26: Ecommerce
ECOMMERCE 40.0 % + 7 % + 46.9 % + 46 BPS ECOMMERCE SHARE EMAIL DATABASE vs PCP REGISTERED USERS CONVERSION RATE vs PCP +120 BPS vs PCP GROWTH vs PCP +1,300 BPS +585 % +7.9 % + 162 % REPEAT PURCHASE RATE vs PCP CHAMPION USERS vs PCP US ECOMMERCE US AMAZON REVENUE vs PCP GROWTH vs PCP COMVITA INVESTOR
Slide 27: FY24 Guidance
SECTION FY24 Guidance
Slide 28: FY24 Guidance
FY24 Guidance FY24 Forecast reflects weaker consumer spending, with some improvement on HY • Revenue $225M – $235M FY24 gross profit forecast of 60% EBITDA excluding ERP costs $30M – $35M Net debt reduced, due to positive operating cashflow FY24 forecast inventory decline vs PCP On target to
Slide 29: Revenue Bridge to FY24
Revenue Bridge to FY24 MID-POINT H1 H2 FY2024 • Greater China assumes some recovery on H1 during H2, however H2 forecast to be H2 down 5.7% on PCP FY2024 FY2024 % forecast % forecast % • North America H2 sales expected to be SEGMENT (NZD 000s) H1 Variance mid- Variance mid- Variance substantially in
Slide 30: Earnings Bridge to FY24
Earnings Bridge to FY24 MID POINT H1 to FY24 EBITDA (excl ERP costs) Bridge NZ$M 76.2 (30.7) 6.0 32.5 (28.5) 9.5 H1 EBITDA Gross Profit Marketing & Other Depreciation FY24 EBITDA (excl. ERP) Sales Expenses (excl. ERP) H1-FY24 Actual H2-FY24 Forecast FY24 Forecast • The Gross Profit in H2 assumes we
Slide 31: Targeting c$50M EBITDA 2025 (20%)
TA R G E T I N G c$50M EBITDA 2025 (20%) PURPOSE + VALUES OUR MISSION TO 2025 COMVITA 50:2025 Working in harmony with bees and nature in New Zealand “To deliver world-leading standards for our team, our consumers, our 60 : 15 : 20 to heal and protect the world shareholders and our planet, contributi
Slide 32: Strong Platform for Long-term Growth
SECTION BEYOND FY24 Strong Platform for Long-term Growth
Slide 33: Purpose & Values
Purpose & Values COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 33
Slide 34: Focus & Progress
CLARITY OF Focus & Progress TO 2025 COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 34
Slide 35: Business Model Proving Successful
MARKET LEADER MARKET MĀNUKA HONEY MARKET SHARE LEADER Business Model MARKET Proving LEADER Successful MARKET LEADER MARKET LEADING IN 5 OUT OF 6 OF OUR KEY MARKETS MARKET LEADER TOP COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 2 - 3 B R A35 ND
Slide 36: Premiumisation
T H E E V O L U T I O N O F C O M V I TA Premiumisation COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 R E TA I L P R E S E N C E I N S T O R E S CIIE 2023 36
Slide 37: Highest Quality Premium Brand
T H E E V O L U T I O N O F C O M V I TA Highest Quality Premium Brand NY TIMES SQUARE CLAUDIA LI / NY FASHION WEEK A U C K L A N D M A R AT H O N COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 37
Slide 38: Premium Brand Partners
T H E E V O L U T I O N O F C O M V I TA Premium Brand Partners KO R E A G R A N D H YAT T H I G H T E A COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 C O L L A B O R AT I O N W I T H S N O W 5 1 38
Slide 39: The Future of Retail is Experiential
The Future of Retail is WELLNESS LAB WUXI Experiential VIRTUAL WELLNESS LAB AKL AIRPORT COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 39
Slide 40: Building Momentum
Revenue ($M) Gross Profit ($M) EBITDA excl ERP ($M) CAGR + 6.1% CAGR + 16.6% CAGR + 67.0% 250 160 40 Building 200 140 120 100 35 30 25 Momentum 150 80 20 100 60 15 40 10 50 20 5 64 96 103 126 139 138 - 4 26 30 34 32.5 FY24 Forecast 171 196 192 209 234 230 - - - 19 20 21 22 23 24 19 20 21 22 23 24 19
Slide 41: Already Made to Build a Platform for Growth
LAB AUTOMATION c$850K P R O D U C T / S U P P LY SCIENCE RESEARCH INVESTMENT $3.4M FY22-FY24 SCALABLE PRODUCTIONS $5.6M Investment SCIENCE & QUALITY TEAM FORESTS $7.1M FY22-FY24 c$31M 7.5K hectares Already Made ERP $10.5M investment finished FY24 to Build a PROCESS ESG INVESTMENT c$750K pa PROCESS E
Slide 42: Platform for Growth
BUILDING Platform for Growth P O I S E D F O R TA K E O F F FY19 FY23 MARKETING INVESTMENT $ 11M 31$ M MARKETS 9 13 R E TA I L & E X P O EXCELLENCE $ 1M $3.8 M FORESTS $ 5M C$ 31.1 M 7.5K ha COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 42
Slide 43: Exciting Future
GLOBAL HONEY MARKET Exciting Future OUR 2030 OPPORTUNITY 2023 2030 WHY ARE WE CONFIDENT WE WILL GET THERE 14 • Core business in growing market T O TA L − US$9bn TAM forecast to grow by +55% by 2030 ADDRESSABLE M A R K E T US$ GLOBAL HONEY MARKET 9BN US$ BN • Low Mānuka honey household penetration (H
Slide 44: Industry Positioning
SECTION Industry Positioning
Slide 45: Industry Strategy
LAUNCHED 20 FEBRUARY 2024 Industry Strategy S T R AT E G I C F R A M E W O R K COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 45
Slide 46: Supply Security
C O M V I TA’ S S U P P LY M O D E L C O M P E T I T I V E A D VA N TA G E COMVITA’S SUPPLY STRATEGY Supply Security HARVEST MODEL AND IMPROVED GROSS MARGINS Sustainable Comvita’s product gross margin is expected to increase from c60% to >65% by 2030 as Comvita Forest in terms of result of price, gr
Slide 47: Standards Tested
HIGHEST THE MOST Standards FOR MĀNUKA Tested MĀNUKA IN THE WORLD > 23 >34 INDEPENDENT CERTS TESTS & A C C R E D I TAT I O N S O N E V E R Y B AT C H > 13 500 K G L O B A L R E S E A R C H PA R T N E R S H I P S + T E S T R E S U LT S I N T E R N AT I O N A L A D V I S O R Y B O A R D FY23 47
Slide 48: Science and IP
F U R T H E R I N V E S T M E N T I N F Y 2 4 T O D AT E Science and IP C O M V I TA L A B O R AT O R I E S E s t 1 9 7 4 Industry leading in clinical trials Industry leading Mānuka honey for digestive health enrolment $ commenced (HVN National Science Challenge grant awarded: $900K) 1.45M lab testi
Slide 49: Science: International Advisory Board
I N T E R N AT I O N A L Science ADVISORY BOARD W O R L D - L E A D I N G G A S T R O E N T E R O L O G I S T S A N D D I G E S T I V E H E A LT H R E S E A R C H E R S 49
Slide 50: Lepteridine Unique and Protected
E X T E N D E D A D VA N TA G E Lepteridine Unique and Protected LEPTERIDINE SOOTHE CLINICAL PAT E N T FA M I LY # 1 PAT E N T FA M I LY # 2 TRIAL COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 50
Slide 51: Clinical Trials
E X T E N D I N G O U R A D VA N TA G E Clinical Trials SOOTHE: Comvita Lepteridine ® Mānuka honey for digestive health • $1.45M investment over 2 years: $900K HVN grant • Proprietary treatment: Comvita Lepteridine ® patented Mānuka honey CONNECTING • Unique to Comvita CONSUMERS TO THE • Study compl
Slide 52: Clinical Trials Pending
E X T E N D E D A D VA N TA G E Clinical Trials PENDING C A R D I O M E TA B O L I C H E A LT H IMMUNITY AT O P I C D E R M AT I T I S ANTIMICROBIAL R E S I S TA N C E COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 52
Slide 53: Impact
SECTION S O C I A L A N D E N V I R O N M E N T I M PA C T Impact
Slide 54: Team / Whānau
HY24 GLOBAL Team / Whānau 595 91% + 24 GLOBAL FULL TIME EQUIVALENT (FTE) ROLES GLOBAL TEAM ARE SHAREHOLDERS (OR eNPS SCORE EQUIVALENT) COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 54
Slide 55: ESG Leadership at Comvita
ESG Leadership at Comvita ENVIRONMENTAL SOCIAL GOVERNANCE Key Focus Areas: Key Focus Areas: Key Focus Areas: ● GHG emissions ● Product quality and food safety ● Board composition (diversity and ● Air and water pollution ● Customer satisfaction independence) ● Biodiversity reporting ● Ethical procure
Slide 56: Safety & Wellbeing
PERFORMANCE VS PCP Safety & Wellbeing 1 J U LY 2 0 2 3 – 3 1 D E C E M B E R 2 0 2 3 3.0 1.5 + 72% TRIFR LTIFR NEAR MISS REPORTING -21% vs FY23 (3.8) -44% vs FY23 (2.7) 3.47 0.9 SAFETY CULTURE MVIFR MATURITY -69% vs FY23 (0.53) +58% vs FY23 (2.2) COMVITA INVESTOR PRESENTATION HALF YEAR RESULT FY24 5
Slide 57: GHG Summary
H1 FY24 GLOBAL GHG Summary R E S U LT S GREENHOUSE GAS EMISSIONS – GLOBAL tCO2e FY24 FY23 Difference tCO2e tCO2e % Total Gross Emissions (S1, S2, major S3) 11,940 13,431 (11%) Removals GHG Inventory (estimated for H1) (3,949) (2,925) 35% Total Net GHG Inventory Emissions (S1, S2 & Major S3) 7,991 10
Slide 58: Summary
SECTION Summary
Slide 59: Exciting Future
GLOBAL HONEY MARKET Exciting Future OUR 2030 OPPORTUNITY 2023 2030 14 T O TA L ADDRESSABLE M A R K E T US$ GLOBAL HONEY MARKET 9BN US$ BN C AT E G O R Y H O U S E H O L D P E N E T R AT I O N < 1% > 3 % C O M V I TA L I F E T I M E VA LU E + 335 % 2.2 GROWTH PRICING GROWTH + % PA REGIONAL GROWTH CHI
Slide 60: Summary
Summary • Challenging first half • Second half estimates reflect recent trading conditions and prudent cost management • Early signs of improvement in China and additional NA distribution agreements signed • Market share robust and 60% gross margin retained • Committed to FY25 strategic plan, c$50M
Slide 61: Q+A
SECTION Q+A
Slide 62: Poised for Take-off
Poised F O R TA K E - O F F