Synlait Milk Ltd. · NZX:SML
Synlait Milk — H1 2022 Earnings Presentation
25 slides from Synlait Milk's earnings presentation, April 2022
Slide 1: Half Year Results Investor Presentation
HALF YEAR RESULTS INVESTOR PRESENTATION For the six months ended 31 January 2022
Slide 2: Financial Performance
PAGE 2 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 FINANCIAL PERFORMANCE Robert Stowell Chief Financial Officer A birds eye view of Synlait’s 600m long rail siding hard stand where up to 30 wagons can be loaded with containers filled from Dry Store 4.
Slide 3: Key Financial Metrics
` PAGE 3 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 KEY FINANCIAL METRICS 790.6 M 117.3 M 19% 269% $ $ REVENUE OPERATING CASH FLOWS 27.9 M 14.5 M 46.0 M 338% 128% 37% $ $ $ NPAT ADJUSTED NPAT* CAPITAL EXPENDITURE 68.4 M 56.5 M 391.8 M 45% 20% 19% $ $ $ EBITDA ADJUSTED EBITDA* NET DEBT 9.60 kgMS 27
Slide 4: Value created in H1 22
PAGE 4 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 BUSINESS REVIEW ACTIONS PROGRESSED IN FIRST HALF Significant progress made to create more value and support a return to sustainable profitability, however there is still work to do and opportunities to unlock: Cost structure review Working capital
Slide 5: Revenue and Sales Volumes
PAGE 5 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 REVENUE AND Sales volume (MT) SALES VOLUMES Revenue up 19% ($126.4m), driven by ingredients volumes and commodity price increases. This is Synlait’s largest H1 volume and revenue on record. Ingredients Beverages & Cream Increase in sales revenue (H
Slide 6: Production and Inventory Volumes
PAGE 6 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 PRODUCTION AND Production volume (MT) INVENTORY VOLUMES Production reduced 9% (10,371MT), driven mainly by less milk processed and product mix changes. Closing inventories down 29% on H1 21. Ingredients Beverages & Creams Decrease in production (H1
Slide 7: Gross Margin Performance
PAGE 7 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 GROSS MARGIN Gross profit ($ millions) PERFORMANCE Reported gross margin improved 16% ($9.4m) due to significant recovery of the Ingredients business cost reductions and resilience of the Lactoferrin business. Ingredients Beverages & Creams Gross m
Slide 8: Operating Cost Performance
PAGE 8 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 OPERATING COST 41.6 1.1 SG&A movement ($ millions) 1.0 1.0 43.1 PERFORMANCE (0.7) (0.9) Cost structure reviewed; on-track to achieve at least $7m in organisational reset savings in FY22. SG&A costs mainly impacted by higher software and short-term
Slide 9: Cash Flow and Net Debt
PAGE 9 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 CASH FLOW Net cash from operating activities ($ millions) 103.8 117.3 AND NET DEBT 15.8 Net debt reduced as inventory was sold down and profitability lifted. 92.3 117.3 85.4 Synlait remains comfortably within its banking arrangements and is focused
Slide 10: Business Performance
PAGE 10 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 BUSINESS PERFORMANCE Grant Watson Chief Executive Officer Synlait has mandated that all staff, contractors and visitors must be fully vaccinated against COVID-19 to enter our facilities. As an additional precaution all staff are currently undergoi
Slide 11: First Impressions from Our New CEO
PAGE 11 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 FIRST IMPRESSIONS FROM OUR NEW CEO 1. Synlait has amazing DNA • Innovative and disruptive culture, and strong sustainability credentials set Synlait apart. • Desire to do things differently is infectious and evident everywhere. 2. Momentum is buil
Slide 12: Business Update Ingredients
PAGE 12 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 BUSINESS UPDATE INGREDIENTS Separating out the Ingredients business as part of the Made With Better Milk organisational reset has seen: • Active discussions underway with Synlait’s current • An increased focus on discipline and execution of the mu
Slide 13: Business Update Nutritionals
PAGE 13 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 BUSINESS UPDATE NUTRITIONALS The a2 Milk Company Lactoferrin • Renewing the State Administration for Market Regulation • Use of lactoferrin growing in other nutritional segments (SAMR) licence for Chinese labelled a2 Platinum® Infant (i.e. vitamin
Slide 14: Business Update Beverages & Cream
PAGE 14 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 BUSINESS UPDATE BEVERAGES & CREAM Synlait continues to develop customer and product innovation UHT cream pipelines. Delay in product coming to market a significant • Continue to amend formulation and specifications focus for management. to service
Slide 15: Business Update Consumer Foods (Dairyworks)
PAGE 15 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 BUSINESS UPDATE CONSUMER FOODS (DAIRYWORKS) H1 22 demonstrated continued progress in Dairyworks strategy ‘Moving From Cheese to Dairy’ and its ambition to be the second biggest player in the New Zealand consumer category: • Foodservice growth stra
Slide 16: Creating Value from Synlait's Sustainability Investment
PAGE 16 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 CREATING VALUE FROM SYNLAIT’S SUSTAINABILITY INVESTMENT Several large-scale projects underway: Significant reduction in Greenhouse Gas Commercialisation of Synlait’s sustainability Emissions continue: strategy progresses: • Synlait, Danone and AgR
Slide 17: Key Priorities for the Second Half
PAGE 17 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 KEY PRIORITIES FOR THE SECOND HALF 1. Deliver critical projects: • Successfully renew the SAMR license for Chinese labelled a2 Platinum® Infant Formula to ensure China market access is retained. • Successfully implement the Enterprise Resource Pla
Slide 18: Full Year 2022 Guidance Statement
PAGE 18 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 FULL YEAR 2022 GUIDANCE STATEMENT Updated as at 1 April 2022 Synlait still expects its Net Profit After Tax result to return Synlait does not expect its profitability to grow at the same Planned reductions in inventory at Synlait and to robust pro
Slide 19: Appendices
PAGE 19 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 APPENDICES Synlait’s striking pink and white tankers have become a common sight on roads around Canterbury and the Waikato.
Slide 20: Gross Profit Performance by Category
PAGE 20 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 GROSS PROFIT PERFORMANCE BY CATEGORY H1 18 H1 19 H1 20 H1 21 H1 22 Sales volume (MT) Nutritionals 19,090 21,947 23,657 19,679 13,774 Ingredients 43,279 50,930 45,673 56,971 72,028 Beverages & Cream - - 15,886 16,151 16,043 Consumer Foods - - 1,057
Slide 21: Banking Facilities, Covenants and Bond Issue
PAGE 21 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 BANKING FACILITIES, COVENANTS AND BOND ISSUE Synlait currently has four syndicated bank facilities in place with ANZ and BNZ: Synlait has key financial covenants in place with its banking syndicate for FY22. 1. Working capital facility (multi-curr
Slide 22: Key Financial Metrics
PAGE 22 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 KEY FINANCIAL METRICS 1,379.1 Gross profit per MT ($)* Return on capital employed (12 month trailing) Debt/(debt + equity) 22.1% 22.6% 47.2% 1,170.6 45.2% 38.7% 1,214.8 1178.6 1,109.0 37.9% 18.0% 39.3% 37.9% 960.6 17.4% 33.3% 12.5% 557.9 594.6 13.
Slide 23: Summarised Income Statement
PAGE 23 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 SUMMARISED INCOME STATEMENT H1 20* H1 21* H1 22 % Change from H1 21 to H1 22 Revenue 559.3 664.2 790.6 19% Cost of sales (476.4) (604.5) (721.5) 19% Gross profit 82.9 59.7 69.1 16% Other income 0.6 1.6 15.4 857% SG&A costs (37.6) (41.7) (43.1) 4%
Slide 24: Disclaimer
PAGE 24 HALF YEAR RESULTS INVESTOR PRESENTATION 2022 DISCLAIMER This presentation is intended to constitute a summary of beyond the control of Synlait and which are subject to Any past performance information in this presentation is given certain information about the Synlait Group (“Synlait”) or in
Slide 25: Investors and Media
INVESTORS AND MEDIA Hannah Lynch Corporate Affairs Manager +64 21 252 8990 hannah.lynch@synlait.com