Synlait Milk Ltd. · NZX:SML
Synlait Milk — H1 FY2021 Earnings Presentation
25 slides from Synlait Milk's earnings presentation, Mar 29, 2021
Slide 1: Synlait Milk Half Year Investor Presentation
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION For the six months ended 31 January 2021
Slide 2: Financial Performance
` PAGE 02 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 FINANCIAL PERFORMANCE 664.2 M 18,085 MT 19% 16% $ REVENUE CONSUMER-PACKAGED INFANT FORMULA SALES Infant Formula Base Powder production down 61% 47.7 M 13.6 MT 29% 16% $ EBITDA LACTOFERRIN PRODUCTION 6.4 M 112.6 M 76% $ $ NPAT DAIRYWORKS REV
Slide 3: What Is Happening in Our Business
PAGE 03 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 WHAT IS HAPPENING IN OUR BUSINESS INDICATIVE ONLY • Synlait typically produces 45% to 50% of its infant base power during the ‘shoulder season’ as milk quality is high and manufacturing capacity is available. • These infant base powder invent
Slide 4: Financial Performance
PAGE 04 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 FINANCIAL PERFORMANCE Angela Dixon Chief Financial Officer DAIRYWORKS Dairyworks’ performance continues butters and protein yoghurts. This has to meet our expectations. The team been supported by strong EBITDA expanded Dairyworks’ footprint o
Slide 5: Results at a Glance
PAGE 05 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 RESULTS AT A GLANCE * The impact of COVID-19, and ongoing recovery of our key customer, had a significant $ millions Net Profit After Tax impact on Synlait’s production and profitability. 90 82.2 74.6 75.2 80 • Net profit after tax $6.4 milli
Slide 6: Revenue and Sales Volumes
PAGE 06 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 REVENUE AND SALES VOLUMES Total revenue up 19% to $664.2 million. Consumer-packaged infant formula Key highlights: • Volumes down 3,486 MT as our key customer’s demand profile resets. • Dairyworks revenue contribution $112.6 million as its Au
Slide 7: Production Volumes
PAGE 07 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 PRODUCTION VOLUMES Lactoferrin MT Production Volumes* kgMS (m) • Production increased 1.9 MT or 16%. 140,000 60 120,000 50 • We continued to optimise lactoferrin extraction methods and 100,000 81,822 94,144 104,326 16,659 90,488 40 our facili
Slide 8: Gross Profit Performance
PAGE 08 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 GROSS PROFIT PERFORMANCE • Gross profit reduced 28% to $59.7 million. $ millions Gross Profit 220 • This was driven by lower consumer-packaged infant formula sales as our 200 186.3 203.7 key customer reset its demand profile and rebalanced in
Slide 9: SG&A Costs
PAGE 09 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 SG&A COSTS Costs are a strong focus: $ millions SG&A Cost Movements • Discretionary costs (consultancy, travel, entertainment) down $3.5 million. 50 1.3 1.2 • A reset of our organisational structure reduced salary costs. This is starting 40 4
Slide 10: Cash Flow
PAGE 10 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 CASH FLOW Operating $ millions Cash Flows From Operating Activities • Synlait typically experiences seasonality in cash flows due to the milk 200 production curve. • Higher Global Dairy Trade pricing for milk has also impacted cash flow. 150
Slide 11: Net Debt
PAGE 11 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 NET DEBT • Net debt (excluding lease liabilities) decreased to $485.1 million. $ millions Net Debt 600 • $200 million equity raise completed. Reduced debt by $196.1 million (net of transaction costs). 500 • Funds raised used to complete strat
Slide 12: Strategy & Outlook Update
PAGE 12 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 STRATEGY & OUTLOOK UPDATE Leon Clement Chief Executive Officer DUNSANDEL RAIL The 30-wagon rail siding at Synlait can to farm-to-port with containerised Dunsandel will be complete in May. goods transported by rail between It will extend our h
Slide 13: Our Focus Now
PAGE 13 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 OUR FOCUS NOW... INDICATIVE ONLY 1 SHORT-TERM: MITIGATE COVID-19 COSTS AND CAPACITY CHANGES 2 LONG-TERM: PULL FORWARD VALUE AND ACCELERATE STRATEGY Growth from recent 2 Investments Waste, yield 1 and efficiency VALUE Organic growth and recove
Slide 14: Short-Term Focus: Mitigating COVID-19 Cost and Capacity Changes
PAGE 14 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 1 SHORT-TERM FOCUS: MITIGATING COVID-19 COST AND CAPACITY CHANGES OPERATING COST SAVINGS (~$10.8 MILLION) • Organisational structure reset to reduce salary costs and ensure capabilities better aligned with strategy. $1.9M • Production approac
Slide 15: Short-Term Focus: Value Chain Cost Savings
PAGE 15 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 1 SHORT-TERM FOCUS: MITIGATING COVID-19: COST AND CAPACITY CHANGES VALUE CHAIN COST SAVINGS (~$11 MILLION ANNUALISED) Dry Store 4 and rail siding • Dry Store 4 to be complemented by a 30-wagon rail siding in May. • This will extend Synlait’s
Slide 16: Long-Term Focus: Pull Forward Value and Accelerate Strategy
PAGE 16 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 2 LONG-TERM FOCUS: PULL FORWARD VALUE AND ACCELERATE STRATEGY We narrowed our strategic focus having completed a phase of significant investment to create new growth opportunities. It therefore made sense to refine and focus our growth strate
Slide 17: Our Focus Has Moved to Extracting Value From Investments
PAGE 17 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 2 OUR FOCUS HAS MOVED TO EXTRACTING VALUE FROM INVESTMENTS WE HAVE ALREADY MADE CREATE OPPORTUNITIES EXTRACT AND GENERATE BUILD GROWTH AND REDUCE RISK NEW VALUE MOMENTUM Fill and develop Expand in response Build capability to demand PHASE 1 P
Slide 18: Leveraging Our Assets: Customers, Categories, and Facilities
PAGE 18 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 2 THE VALUE WE CAN SEE COMES FROM LEVERAGING OUR ASSETS: CUSTOMERS, CATEGORIES, AND FACILITIES CUSTOMERS CATEGORIES FACILITIES NEW ZEALAND / AUSTRALIA INFANT NUTRITION DUNSANDEL LACTOFERRIN POKENO South Island Limited FRESH MILK AND CREAM MUL
Slide 19: Chasing ~$200 Million Worth of Value
PAGE 19 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 2 ... AND WE ARE CHASING ~$200 MILLION WORTH OF VALUE SHORT-TERM (Next 12 Months) MEDIUM-TERM (Next 12 - 24 Months) LONG-TERM (24 Months Plus) BUSINESS TO BUSINESS WHEY LACTOSE CHEESE FRESH CASEIN LAUNCH MADE WITH BETTER MILK NEW MULTINATIONA
Slide 20: FY21 Guidance Update
PAGE 20 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 FY21 GUIDANCE UPDATE As signalled earlier this month, Synlait is continuing to experience Board and management have considered the above factors and significant uncertainty and volatility within its business. This is due to: how they will imp
Slide 21: Appendices
PAGE 21 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 APPENDICES DUNSANDEL CAFE Our in-house staff cafeteria at Synlait Dunsandel brings teams together from across the business on a daily basis.
Slide 22: Gross Profit Performance by Category
PAGE 22 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 GROSS PROFIT PERFORMANCE BY CATEGORY SALES VOLUME (MT) HY19 FY19 HY20 FY20 HY21 Powders and Cream 56,116 106,802 46,259 101,222 57,025 Consumer-Packaged Powders 17,684 42,907 21,571 49,180 18,085 Lactoferrin 6 21 8 30 9 Subtotal 73,806 149,73
Slide 23: Bank Facilities, Covenants and Bond Issue
PAGE 23 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 BANK FACILITIES, COVENANTS AND BOND ISSUE Synlait currently has four syndicated bank facilities in place with We have five key covenants in place with our bank syndicate ANZ and BNZ These are: 1. Working capital facility (multi-currency) – fa
Slide 24: Disclaimer
PAGE 24 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 DISCLAIMER This presentation is intended to constitute a summary of certain information about the Synlait Group information) will have been prepared in accordance with, nor is it intended to comply with: (i) the (“Synlait”) or in connection w
Slide 25: Investors and Media
PAGE 25 SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021 Investors and Media Hannah Lynch Corporate Affairs Manager P: +64 21 252 8990 E: hannah.lynch@synlait.com