Synlait Milk Ltd. · NZX:SML
Synlait Milk — FY2023 Earnings Presentation
35 slides from Synlait Milk's earnings presentation, Sep 25, 2023
Slide 1: Full Year Results Investor Presentation
FULL YEAR RESULTS INVESTOR PRESENTATION For the 12 months ended 31 July 2023
Slide 2: Key Takeaways from Today
KEY TAKEAWAYS FROM TODAY FY 23 Extremely challenging financial year, with a poor financial result delivered. Joyhana (UHT cream) State Administration for *TRIFR reduced >30% launched, commercial Market Regulation (SAMR) since Synlait Safe launch in ELT renewal. sales underway. re-registration achiev
Slide 3: Financial Performance
FINANCIAL PERFORMANCE Robert Stowell Chief Financial Officer Align Farms Ltd – Emilius, Carew, Canterbury. FULL YEAR RESULTS INVESTOR PRESENTATION 2023
Slide 4: Results at a Glance
RESULTS AT A GLANCE 3% $2.8M $ 1.60 B $ 144.0 M TOTAL GROUP REVENUE TOTAL GROUP GROSS PROFIT 83% 39.0 M $42.8M $33.8M ( $ 4.3 M ) $ 2.5 M $ TOTAL GROUP NPAT ADJUSTED TOTAL GROUP NPAT 1 OPERATING CASHFLOW $40.9M $27.4M 32% $ 90.7 M $ 95.6 M $ 65.1 M TOTAL GROUP EBITDA ADJUSTED TOTAL GROUP EBITDA 1 CA
Slide 5: Synlait's FY23 Result
SYNLAIT’S FY 23 RESULT 36.3 Adjusted NPAT bridge ($ millions) 11.1 Decreased Advanced Nutrition margin, significant ERP implementation costs, high inflationary (2.9) 7.6 pressures, and increased interest costs significantly impacted financial performance in FY 23. Ingredients Consumer (Beverages & C
Slide 6: Revenue and Sales Volumes
REVENUE AND SALES VOLUMES Sales revenue ($ millions) Total revenue attributable to business units was down 8% ($117m) driven by lower ingredient sales volumes (down 18%) due to higher FY 21 carry-over inventory in FY 22, lower Global Dairy Trade (GDT) prices, and higher production of Advanced Nutrit
Slide 7: Production and Closing Inventory Volumes
PRODUCTION AND CLOSING Production volume (MT) INVENTORY VOLUMES Production volumes decreased 2% (3,804 MT) primarily due to reductions in ingredient volumes because of higher Advanced Nutrition base powder production, partially offset by higher production of UHT whipping cream and milk products. Clo
Slide 8: Gross Margin Performance
GROSS MARGIN PERFORMANCE Gross profit ($ millions) Group gross profit was largely consistent with the prior year (FY 23: $144.0m, FY 22: $146.8m). Overall performance fell short of expectations due to lower than forecast Advanced Nutrition margin and significant cost pressures due to operational sta
Slide 9: SG&A & Manufacturing Costs
SG&A & MANUFACTURING COSTS SG&A and ERP cost movement ($ millions) 1.7 129.3 10.6 3.5 Increase driven by higher people costs, ERP and other costs, and general cost pressures due to high 1.6 1.4 2.3 9.8 4.2 1.9 inflation. In summary, SG&A and manufacturing costs have increased $37.0m and $34.7m, resp
Slide 10: Cash Flow and Net Debt
CASH FLOW AND NET DEBT Net debt movement ($ millions) 3.8 44.0 413.5 Net debt ended 21% ($71.6m) higher than FY 22 due to lower operating cash flows, significantly higher 65.1 341.9 (2.3) interest costs, and Advanced Nutrition base powder build. (39.0) Operating cash flows Financing costs Operating
Slide 11: Debt Facilities and Banking Covenants
DEBT FACILITIES AND BANKING COVENANTS Synlait is pleased to announce it has successfully refinanced its debt facilities, introducing four new banks into the banking syndicate. The new syndicate, led by ANZ Bank, provides increased service offerings and capacity at a very reasonable cost. Synlait’s r
Slide 12: Business Update
BUSINESS UPDATE Grant Watson Chief Executive Officer Mt Hutt Dairies, Mt Hutt, Canterbury. FULL YEAR RESULTS INVESTOR PRESENTATION 2023
Slide 13: Advanced Nutrition
ADVANCED NUTRITION Leadership Achievements Synlait and The a2 Milk Company Nutritional Powders • Naiche Nogueira started as Director of Advanced Nutrition in State Administration for Market Manufacturing and Supply Agreement (NPMSA) update January 2023. Regulation (SAMR) achieved Synlait has receive
Slide 14: Foodservice
FOODSERVICE Leadership Achievements • Abby Ye started as President of China & Director Launch of JOYHANA partnership between Synlait of Foodservice in March 2023. and SAVENCIA Group • Commercial sales commenced in FY 23, and Strategy volumes will continue to ramp into FY 24. • Five-year Foodservice
Slide 15: Ingredients
INGREDIENTS Strategy Achievements • Five-year Ingredients strategy refresh completed. • Strong gross margin per MT achieved (up 16%) due Focus on driving strong sales disciplines, while to excellent alignment to the SMP/AMF lead bucket, leaning out cost base. which lasted for most of FY 23 and was s
Slide 16: Consumer (Dairyworks)
CONSUMER (DAIRYWORKS) Strategy Business development • Dairyworks has recently focused on its core cheese • Significant pipeline of opportunities in Australia and category, exiting yoghurt and spreadable butter. South East Asia due to lower cost of milk in New The strategic growth focus is on diversi
Slide 17: On-Farm Excellence and Sustainability
ON-FARM EXCELLENCE AND SUSTAINABILITY Leadership Synlait Farms (Dunsandel) • Charles Fergusson started as Director of On-Farm • Continued investment in on-farm infrastructure and Excellence and Business Sustainability in February teams. Ambition to become Lead with Pride™ certified 2023. and a centr
Slide 18: Strategy and Outlook Update
STRATEGY AND OUTLOOK UPDATE Grant Watson Chief Executive Officer Reddecliffe Farm, Beautiful Valley, Canterbury. FULL YEAR RESULTS INVESTOR PRESENTATION 2023
Slide 19: Strategy Refresh: Creation of a More Focused Synlait
STRATEGY REFRESH CREATION OF A MORE FOCUSED SYNLAIT • Board and Executive Leadership Team completed strategy refresh. • Refreshed strategy leverages Synlait’s world-class capabilities and asset base to partner to produce high-value Advanced Nutrition and Foodservice B2B products, supported by a disc
Slide 20: Synlait Strategy FY24 – FY28
SYNLAIT STRATEGY FY 24 – FY 28 Our Purpose – Doing Milk Differently For A Healthier World AMBITION RIGHT TO PLAY CHANNELS CATEGORIES TO FY 28 OUR STRONG FOUNDATIONS OUR BUSINESS TYPES OUR PRODUCTS Farmer Net Customer Net Staff Engagement Food Safety Highly Utilised, Advanced Nutrition Advanced Foods
Slide 21: Strategy Refresh Summary of Key Changes: Right to Play
STRATEGY REFRESH SUMMARY OF KEY CHANGES RIGHT TO PLAY is Synlait’s core capabilities; some might refer to this as our tickets to the game. FROM Food Safety and Quality Regulatory Nutritionals Know-How TO Surety of Supply Efficient Manufacturing Sustainability Credentials PAGE 21 FULL YEAR RESULTS IN
Slide 22: Strategy Refresh Summary of Key Changes: Channels
STRATEGY REFRESH SUMMARY OF KEY CHANGES CHANNELS (or business units) are the areas Synlait is focusing its efforts. FROM Consumer Foodservice TO Manufacturing PAGE 22 FULL YEAR RESULTS INVESTOR PRESENTATION 2023
Slide 23: Strategy Refresh Summary of Key Changes: Categories
STRATEGY REFRESH SUMMARY OF KEY CHANGES CATEGORIES are the products Synlait manufactures within its business units. FROM Milk Powder Beverages and Cream AMF and Butter TO Cheese Infant and Adult Nutrition Lactoferrin * TBC, further opportunities being explored. PAGE 23 FULL YEAR RESULTS INVESTOR PRE
Slide 24: Strategy Refresh Summary of Key Changes: Key Enablers
STRATEGY REFRESH SUMMARY OF KEY CHANGES KEY ENABLERS are focus areas across Synlait to ensure we execute with excellence. FROM On-Farm Excellence Customer Engagement Disciplined New Product Development and New Technology Development TO Employer of Choice Systems, Tools and Processes Manufacturing an
Slide 25: Synlait Strategy FY24 – FY28
SYNLAIT STRATEGY FY 24 – FY 28 Our Purpose – Doing Milk Differently For A Healthier World AMBITION RIGHT TO PLAY CHANNELS CATEGORIES TO FY 28 OUR STRONG FOUNDATIONS OUR BUSINESS TYPES OUR PRODUCTS Farmer Net Customer Net Staff Engagement Food Safety Highly Utilised, Advanced Nutrition Advanced Foods
Slide 26: Renewed Executive Leadership Team
RENEWED EXECUTIVE LEADERSHIP TEAM LIFTING SYNLAIT’S CULTURE, CAPABILITY AND EXECUTION Grant Watson Rob Stowell Paul Mallard Naiche Nogueira Abby Ye Adam Maxwell Chief Executive Officer Chief Financial Officer Chief Operating Officer Director of Advanced Nutrition President China and Director Directo
Slide 27: Synlait's Full Year 2024 Outlook
SYNLAIT’S FULL YEAR 2024 OUTLOOK FY 23 was highly challenging for Synlait with material reductions in customer demand, CO2 shortages, extreme weather events, the COVID-19 pandemic, inflationary impacts, ongoing investments in new product workstreams (i.e., UHT cream and Advanced Nutrition customer g
Slide 28: Next Steps
NEXT STEPS Institutional Investor Site Tour at Synlait Pokeno Annual Meeting at Synlait Dunsandel • Management will host an institutional investor site tour at Synlait • Synlait’s Annual Meeting is on Friday 1 December 2023, at 1.00pm. Pokeno on Monday 30 October 2023. • The Annual Meeting will be h
Slide 29: Appendix
APPENDIX Drewe and Tamara Finlay’s Farm – Taupiri, Waikato. FULL YEAR RESULTS INVESTOR PRESENTATION 2023
Slide 30: Milk Price and Milk Pool
MILK PRICE MILK POOL RAW MILK PROCESSED No. of kgMS kgMS Farms (millions) (thousands) $10.00 $0.29 300 100.0 90,000 $0.27 90.0 80,000 $0.27 250 $8.00 80.0 70,000 $0.25 $0.18 70.0 200 60,000 $6.00 60.0 50,000 150 50.0 40,000 $4.00 40.0 $6.40 $7.05 $7.55 $9.30 $8.22 100 30,000 66,066 70,472 82,737 78,
Slide 31: Key Financial Metrics
KEY FINANCIAL METRICS Gross profit per MT ($)* Return on capital employed Debt/(debt + equity) 1,174.3 18.0% 1,043.5 12.5% 47.2% 725.1 650.1 39.3% 34.3% 38.7% 5.6% 30.0% 2.7% 307.7 FY 19 FY 20 FY 21 FY 22 FY 23 FY 19 FY 20 FY 21 FY 22 FY 23 FY 19 FY 20 FY 21 FY 22 FY 23 (1.5%) EBIT per MT ($) Basic
Slide 32: Gross Profit Performance by Category
GROSS PROFIT PERFORMANCE BY CATEGORY FY 19 FY 20 FY 21 FY 22 FY 23 Sales Volume (MT) Ingredients 98,499 97,561 125,914 132,481 108,856 Advanced Nutrition 51,231 52,871 34,362 33,506 31,971 Consumer 8,947 44,818 58,483 59,786 56,999 Foodservice - - - - 757 Subtotal 158,677 195,250 218,759 225,773 198
Slide 33: Summarised Five Year Income Statement
SUMMARISED FIVE YEAR INCOME STATEMENT FY 19 FY 20 FY 21 FY 22 FY 23 Revenue 1,024,305 1,302,025 1,367,349 1,660,601 1,603,580 Cost of sales (837,976) (1,098,292) (1,300,042) (1,513,827) (1,459,588) Gross profit 186,329 203,733 67,307 146,774 143,992 Other income 898 404 3,870 22,777 16,333 Share of
Slide 34: Disclaimer
DISCLAIMER This presentation is intended to constitute a summary of certain known and unknown risks, uncertainties, assumptions and other in this presentation is given for illustration purposes only and is information about the Synlait Group (“Synlait”) or in connection important factors, many of wh
Slide 35: For More Information Contact
FOR MORE INFORMATION CONTACT: Hannah Lynch Head of Strategy & Corporate Affairs +64 21 252 8990 hannah.lynch@synlait.com