Synlait Milk Ltd. · NZX:SML
Synlait Milk — H1 2019 Earnings Presentation
38 slides from Synlait Milk's earnings presentation, Mar 20, 2019
Slide 1: Our Year in the Making: Half Year Report 2019
OUR YEAR IN THE MAKING SYNLAIT MILK LIMITED HALF YEAR REPORT 2019
Slide 2: Disclaimer
I PG 2 DISCLAIMER Synlait Milk Limited Half Year Report 2019 - This presentation is intended to constitute a summary of certain performance or achievements may differ materially from those - Forward looking statements in this presentation are unaudited and information about Synlait Milk Limited (“Sy
Slide 3: Strategic Update
I PG 3 Synlait Milk Limited Half Year Report 2019 STRATEGIC UPDATE LEON CLEMENT CHIEF EXECUTIVE OFFICER
Slide 4: Interim Results Update
I PG 4 Synlait Milk Limited Half Year Report 2019 - Half year net profit of $37.3 million compared to $41.3 million for the same period last year (HY18) - Re-confirm guidance for canned infant formula volumes INTERIM of 41,000 - 45,000 MT and that profitability is expected to increase in FY19, but n
Slide 5: Stated Objectives vs Progress to Date
I PG 5 STATED OBJECTIVES VS PROGRESS TO DATE Synlait Milk Limited Half Year Report 2019 GROWTH: CAPABILITIES: GROWTH: CAPABILITIES: DEEPER AND BROADER = LEAPFROG = DEEPER AND BROADER = LEAPFROG = CHASE PROFIT POOLS CREATE LONG TERM VALUE CHASE PROFIT POOLS CREATE LONG TERM VALUE 1. Deepen relationsh
Slide 6: Doing Milk Differently for a Healthier World
I PG 6 OUR PURPOSE Synlait Milk Limited Half Year Report 2019 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 7: Our Ambition and Our Strategy
I PG 7 OUR AMBITION OUR STRATEGY Synlait Milk Limited Half Year Report 2019 When we look back... DOING MILK DIFFERENTLY OUR CATEGORIES “WE WILL FEEL PROUD OF THE BOLD STANCE WE HAVE TAKEN, THE GLOBAL DIFFERENCE Infant Nutrition Everyday Dairy Ingredients Adult Nutrition WE HAVE MADE AND FOR A HEALTH
Slide 8: Infant Nutrition Update
I PG 8 INFANT NUTRITION UPDATE Synlait Milk Limited Half Year Report 2019 Infant Nutrition Infant Nutrition business continues to grow Second infant-capable processing site at Pokeno remains on track to - Continue to build on our strong partnership with The a2 Milk CompanyTM be commissioned for the
Slide 9: The a2 Milk Company
I PG 9 THE a2 MILK COMPANY Synlait Milk Limited Half Year Report 2019 Infant Nutrition Synlait has exclusive supply rights for The a2 Milk Company’sTM Synlait maintains an A1 protein-free milk pool, allowing it to create canned infant formula products for the Australia / New Zealand (ANZ) products f
Slide 10: Portfolio of Infant Formula Customer Partnerships
I PG 10 PORTFOLIO OF INFANT FORMULA CUSTOMER Synlait Milk Limited Half Year Report 2019 PARTNERSHIPS Infant Nutrition REGULATORY UPDATE - Most functions of the former AQSIQ and CFDA have merged into SAMR and the remaining functions of AQSIQ have moved - Five year minimum supply to GACC which include
Slide 11: Everyday Dairy
I PG 11 EVERYDAY DAIRY Synlait Milk Limited Half Year Report 2019 Everyday Dairy Advanced Liquid Dairy Packaging Facility is currently In addition to other liquid milk opportunities, Synlait is currently being commissioned evaluating a number of options to target high-returning, fast-growing - In pa
Slide 12: Ingredients + Lactoferrin
I PG 12 INGREDIENTS + LACTOFERRIN Synlait Milk Limited Half Year Report 2019 Ingredients Synlait has experienced a strong HY19 in the ingredients business, Synlait has a strong and growing customer base for lactoferrin, supported by a significant realisation of manufacturing efficiencies primarily f
Slide 13: Environment
I PG 13 ENVIRONMENT Synlait Milk Limited Half Year Report 2019 Environment Lead agriculture’s response to climate change Pioneer the circular economy system in - Greenhouse gas reduction targets: -35% on-farm; New Zealand -50% off-farm per kgMS - Targets: Zero waste to landfill Circular Climate - 32
Slide 14: People
I PG 14 PEOPLE Synlait Milk Limited Half Year Report 2019 People Health, Safety and Wellness Diversity - Total Recordable Injury Frequency Rate (TRIFR) - Training leaders to remove conscious and unconscious decreased from 18.1 to 15.8 per million hours worked Diversity biases from their decision mak
Slide 15: Enterprise
I PG 15 ENTERPRISE Synlait Milk Limited Half Year Report 2019 Enterprise Lead the food industry for transparency + accountability Investing in innovation to establish a world class - On-track for B Corp certification by 30 June 2019 value chain Transparency - Committed to Science Based Targets initi
Slide 16: Our Financial Results
I PG 16 Synlait Milk Limited Half Year Report 2019 OUR FINANCIAL RESULTS NIGEL GREENWOOD CHIEF FINANCIAL OFFICER
Slide 17: Overview
I PG 17 OVERVIEW Synlait Milk Limited Half Year Report 2019 Net Profit After Tax $ Millions NPAT: $37.3 million in HY19 vs. $41.3 million in HY18 80.0 74.6 70.0 - Significant increase in manufacturing efficiencies enabled 12.4% 60.0 33.3 more milk to be processed in HY19 50.0 - Powders and cream sal
Slide 18: Sales Volume and Inventory
I PG 18 SALES VOLUME AND INVENTORY Synlait Milk Limited Half Year Report 2019 Sales Volumes* MT HY19 powders and cream volumes increased 26% on prior year, 100,000 due to 12.4% more milk being processed than in HY18 80,000 73,800 - This was enabled by improved manufacturing efficiencies as a 61,044
Slide 19: Production Volume
I PG 19 PRODUCTION VOLUME Synlait Milk Limited Half Year Report 2019 Production Volumes* MT kgMS (millions) First half milk processed up 12.4% on HY18 at 43.1 million kgMS 160,000 70.0 - Total production increased by 10.5% to 90,495 MT in HY19 vs 81,828 MT in HY18, with production volumes up on HY18
Slide 20: Gross Profit Performance
I PG 20 GROSS PROFIT PERFORMANCE Synlait Milk Limited Half Year Report 2019 Gross Profit Per MT $ Gross profit per MT was lower than HY18, primarily due to a product 1,600 mix shift towards lower margin powders and cream 1,400 1,200 1,000 However, the lower margin per MT on canned infant formula sal
Slide 21: Overheads
I PG 21 OVERHEADS Synlait Milk Limited Half Year Report 2019 Overheads $ Millions Increase in overheads reflective of headcount investment to 60.0 54.2 support growth in Everyday Dairy category, Technical (R&D) and 50.0 44.6 capacity at Pokeno 38.6 40.0 29.7 - Net overheads have increased by $4.7 mi
Slide 22: Operating Cash Flow
I PG 22 OPERATING CASH FLOW Synlait Milk Limited Half Year Report 2019 Operating Cashflow $ Millions Synlait typically experiences weak cash flows in H1 due to the milk 200.0 production curve - Operating cashflow has reduced in HY19 to $31.5 million, down from $75.0 million in HY18, which was somewh
Slide 23: Net Debt
I PG 23 NET DEBT Synlait Milk Limited Half Year Report 2019 Net Debt $Millions Significant investment in major growth projects 350.0 - $250.4 million of capital expenditure over the 12 month period from 300.0 HY18 to HY19. The major components of this were: 250.0 200.0 - Second infant-capable manufa
Slide 24: Outlook
LEON CLEMENT CHIEF EXECUTIVE OFFICER OUTLOOK Synlait Milk Limited Half Year Report 2019 I PG 24
Slide 25: Second Half Returns
I PG 25 SECOND HALF RETURNS Synlait Milk Limited Half Year Report 2019 Canned Infant Formula Sales MT Remain on track to deliver FY19 canned infant formula volume 50,000 guidance of 41,000 - 45,000 MT, with higher sales volumes forecast 45,000 in H2 FY19 45,000 Guidance Range - Higher share of annua
Slide 26: Appendices
APPENDICES Synlait Milk Limited Half Year Report 2019 I PG 26
Slide 27: Synlait's Integrated Value Chain
I PG 27 SYNLAIT’S INTEGRATED VALUE CHAIN Synlait Milk Limited Half Year Report 2019 RESEARCH + CATEGORY DEVELOPMENT - Dedicated R&D facility at Palmerston North - Focus on innovating production and process - New product development in attractive categories and markets DIFFERENTIATED MILK SUPPLY MANU
Slide 28: Manufacturing Excellence: Dunsandel
I PG 28 MANUFACTURING EXCELLENCE Synlait Milk Limited Half Year Report 2019 CONTRACTED FARMS WETMIX KITCHENS HIGH SPECIFICATION SPRAY DRYERS CONSUMER PACKAGING APPROX. 200, TOTAL SUPPLY 80,000 MT CAPACITY 120,000 MT CAPACITY 70,000 MT CAPACITY APPROX. 65M kgMS A1 PROTEIN-FREE WETMIX 2 D3 DUNSANDEL M
Slide 29: Our Geographic Footprint
I PG 29 AUCKLAND CANNING Synlait Milk Limited Half Year Report 2019 POKENO • SAMR registration in progress • Plant on schedule for 2019 / 2020 milk season commissioning • A1 protein-free and Lead With PrideTM milk pools being formed OUR GEOGRAPHIC PALMERSTON NORTH FOOTPRINT • R+D staff to grow from
Slide 30: Gross Profit by Category
I PG 30 GROSS PROFIT BY CATEGORY Synlait Milk Limited Half Year Report 2019 Sales Volume (MT) Gross Profit ($m) Gross Profit / MT HY19 FY18 HY18 HY19 FY18 HY18 HY19 FY18 HY18 Powders and Cream1 56,116 93,042 44,435 69.6 134.4 71.6 959 1,065 1,192 Consumer Packaged 17,684 35,580 16,839 14.0 27.6 13.5
Slide 31: Banking Facilities and Covenants
I PG 31 BANKING FACILITIES AND COVENANTS Synlait Milk Limited Half Year Report 2019 Synlait currently has three syndicated bank facilities in place with ANZ We have four key bank covenants in place within our syndicated bank and BNZ. facility agreement. 1. Working capital facility (multi-currency) –
Slide 32: Infant Nutrition Market Update
I PG 32 INFANT NUTRITION MARKET UPDATE Synlait Milk Limited Half Year Report 2019 Infant Nutrition Global Infant Formula demand (US$ millions)1 Globally, the Infant Nutrition market continues to grow strongly, with 80,000 the global market forecast growth at 6% p.a. between FY19 and FY23(1) • Asia P
Slide 33: Ingredients Market Update
I PG 33 INGREDIENTS MARKET UPDATE Synlait Milk Limited Half Year Report 2019 Ingredients INGREDIENTS LACTOFERRIN Despite global economic uncertainties, there’s been continued demand Demand for lactoferrin is driven by increasing use in infant formula, for New Zealand dairy ingredients, complemented
Slide 34: Asset Base and Shareholder Base
I PG 34 ASSET BASE AND SHAREHOLDER BASE Synlait Milk Limited Half Year Report 2019 Shareholder base anchored by key customers - Some of Synlait’s biggest customers, namely The a2 Milk Company (17.4%), Bright Dairy (39.0%) and Munchkin Location Facility Capacity (MT) Commissioning Output (2.8%), are
Slide 35: Global Market Reach
I PG 35 GLOBAL MARKET REACH Synlait Milk Limited Half Year Report 2019 Synlait manufactures a broad range of nutritional dairy products HY19 sales revenue by geographical area for the global market - Synlait’s customers have global reach, selling across five 11% China continents 28% Rest of Asia - A
Slide 36: Board of Directors
I PG 36 BOARD OF DIRECTORS Synlait Milk Limited Half Year Report 2019 Our Board of Directors are committed to building a world-class nutritional business and the enhancement of shareholder value. Graeme Milne John Penno Hon. Ruth Richardson Bill Roest Sam Knowles Sihang Yang Qikai (Albert) Lu Min Be
Slide 37: Leadership
I PG 37 LEADERSHIP Synlait Milk Limited Half Year Report 2019 OUR LEADERSHIP TEAM ARE HIGHLY SKILLED AND COMMITTED TO OUR VISION OF BECOMING THE WORLD’S MOST INNOVATIVE AND TRUSTED DAIRY COMPANY. Leon Clement CHIEF EXECUTIVE OFFICER Neil Betteridge Chris France Nigel Greenwood Dr. Suzan Horst Martij
Slide 38: Investors and Media Contacts
I PG 38 INVESTORS MEDIA Synlait Milk Limited Half Year Report 2019 Chris Simcock, Investor Relations Jessica Thorn, Senior Communications Advisor +64 27 325 0654 +64 3 373 3353 Chris.Simcock@synlait.com Jessica.Thorn@synlait.com