Synlait provides investor presentation

Synlait Milk Limited · 1028 Heslerton Road, RD13 Rakaia, Canterbury, New Zealand · +643 373 3000 · www.synlait.com

NZX: SML
ASX: SM1


30 October 2023

Synlait provides investor presentation
Synlait Milk Limited (Synlait) provides a copy of the presentation, which will be given to investors and
analysts today at a site tour of its Synlait Pokeno facility.

There is no new material information in the presentation.

For more information contact:
Media
Allan Swann
Corporate Communications Manager
P: +64 27 211 4874
E: allan.swann@synlait.com

Investors
Hannah Lynch
Head of Strategy & Corporate Affairs
P: +64 21 252 8990
E: hannah.lynch@synlait.com

---

POKENO
INSTITUTIONAL
INVESTOR SITE TOUR
30 October 2023

SYNLAIT’S EVOLUTION
Grant Watson
Chief Executive Officer

TO REMAIN COMPETITIVE SYNLAIT’S
STRATEGY NEEDED TO EVOLVE ...
FROM (PRE-2022)
Enabled by a refreshed Executive Leadership Team
•Concentration risk
•Risk appetite
•Capacity and supply led
•Scattergun approach to opportunities
•Quick-fix problem solving
•Reliant on people experience
•Siloed mentality
•Tactical responses to customer needs
•Well positioned for milk supply
•Diversified channels, categories and geographies
•Business stability
•Customer and demand led
•Opportunities grounded in competitive advantage
•Permanent quality solutions
•Enabled by mature systems, tools and processes
•Cross functional ways of working
•World class customer engagement
•Processing partner of choice
TO (2022 ONWARDS POST STRATEGY REFRESH)
POKENO INSTITUTIONAL INVESTOR SITE TOUR

... BUT THE MACRO ENVIRONMENT HAS CHANGED
Geopolitical
changes
Extreme weather events
impacting milk supply
New Zealand
CO2 shortages
Inflationary
pressures
COVID-19China birth
rates declining
Substantial capital
investment in China-based
manufacturing assets
Global supply
chain challenges
Tight labour market
CO2
POKENO INSTITUTIONAL INVESTOR SITE TOUR

SO, HOW HAS SYNLAIT EVOLVED?
PEOPLE
Staff numbers
Shift numbers
PROFITABILITY
Customer demand
Net Profit After Tax (NPAT)
MILK SUPPLY
Milk processors
Peak cow and milk
Synlait Farmer Leadership Team
POKENO INSTITUTIONAL INVESTOR SITE TOUR

MILK FLOWS HAVE BEEN RELATIVELY FLAT FOR SEVERAL YEARS ...... AND SYNLAIT HAS RETAINED ITS 4% MARKET SHARE.
80%
90%
70%
60%
50%
40%
30%
20%
10%
0%
1.5
1
.5
0
-.5
2
100%
15
10
5
0
-5
20
Milk
production
(m’ kgMS)
YoY
production
change (%)
03/0403/04
04/0504/05
05/0605/06
06/0706/07
07/0807/08
08/0908/09
09/1009/10
10/1110/11
11/1211/12
12/1312/13
13/1413/14
14/1514/15
15/1615/16
16/1716/17
17/1817/18
18/1918/19
19/2019/20
20/2120/21
21/2221/22
22/2322/23
New Zealand milk production volumeProcessor share of New Zealand milk pool
Fonterra
SynlaitOther
MILK SUPPLY
Milk production is flat, while milk processors are rising.
POKENO INSTITUTIONAL INVESTOR SITE TOUR

4.0
4.5
5.0
3.5
3.0
2.5
2.0
5.5
Total milking
cows (million
heads)
96/97
98/9998/9998/99
00/01
02/03
04/05
06/07
14/15
08/09
16/17
10/11
18/19
12/13
20/21
Total milking cows and production per cow
400
350
300
250
200
450
Production
per cow
(kgMS/cow)
Dairy farmers are committed to making it work. What is Synlait doing?
Establish Synlait’s
competitive
advantage.
Achieve geographic
expansion. Synlait
is a New Zealand
company.
Resource
appropriately.
1
RETENTION & GROWTH
2
GROWTH
3
GROWTH
MILK SUPPLY
Peak milk and cow have also arrived. How do we compete?
PURPOSE
AND CULTURE
MADE WITH
BETTER MILK
COMPETITIVE, TRANSPARENT
FARMGATE MILK PRICE
FAVOURABLE
ADVANCE RATE
AND NO SHARES
DIGITAL TOOLS
AND ON-FARM
SUPPORT
INDUSTRY AND
COMMUNITY
ENGAGEMENT
SPECIALTY
MILK
PREMIUMS
LEAD WITH
PRIDE™
1
5
3
7
2
6
4
8
POKENO INSTITUTIONAL INVESTOR SITE TOUR

MILK SUPPLY
Adam Williamson
South Island
Dan Schat
South Island
Henry Bolt
South Island
Gary Michael
South Island
Rebecca Hubbard
North Island
Susie Woodward
North Island
Phill Everest
Co-Chair
Will Burrett
South Island
Synlait established a Farmer Leadership Team of eight farmer suppliers who are a conduit to the company.
POKENO INSTITUTIONAL INVESTOR SITE TOUR

Where headcount growth has come from
200
150
100
50
0
Current customer demand changes
SAMR registration
ERP implementation
COVID-19
New customer growth
Training centralised
FY 22FY 23
PEOPLE
Macro impacts and customer demand changes significantly impact planning and production cycles.
Total headcount trend
1200
900
600
300
0
North IslandSouth IslandTotal
FY 20FY 19FY 18FY 21FY 22FY 23
POKENO INSTITUTIONAL INVESTOR SITE TOUR

•New shifts take a minimum of nine months to recruit (three months), reach a competent level without supervision (three months),
and support the delivery of full attainment to plan (three months).
•Blending and canning shift numbers:
•Dunsandel: 23 people
•Auckland: 25 people
•Shift changes also require changes to other team structures, i.e., quality, warehousing, maintenance, and other manufacturing teams.
SAMR re-
registration
expired
1
4
2
5
3
6
Dec
2020
Oct
2021
May
2021
Mar
2022
Nov
2022
Feb
2023
Jan
2021
Nov
2021
Jun
2021
Apr
2022
Feb
2021
Dec
2021
Aug
2022
Jul
2021
May
2022
Mar
2021
Jan
2022
Sep
2022
Dec
2022
Aug
2021
Jun
2022
Apr
2021
Feb
2022
Oct
2022
Jan
2023
Mar
2023
Sep
2021
Jul
2022
Customer
demand
decreases
(COVID-19)
Blending &
Canning shift
reduction (5 → 4)
15% of
workforce
disestablished
in reaction
to demand
decrease
Customer
demand
decreases
Blending &
Canning shift
increase (3 → 4)
Blending &
Canning shift
reduction (5 → 4)
Blending &
Canning shift
increase (5 → 6)
ERP
implementation
Back on track with
infant formula supply
China-label stock build
for SAMR registration
PEOPLE
Customer demand changes also have a significant impact on national shift numbers.
Blending &
Canning shift
reduction (6 → 5)
Blending &
Canning shift
reduction (4 → 3)
Blending &
Canning shift
increase (4 → 5)
POKENO INSTITUTIONAL INVESTOR SITE TOUR

PROFITABILITY
Synlait built capacity ahead of the curve, allowing capacity and supply to underpin strategic assumptions.
Advanced Nutrition volumes
(FY 18 forecast vs FY 23 actuals)
Dryers
required
4
3
2
1
5
FY 17
Pokeno site
acquisition
FY 22FY 18FY 23FY 19FY 20FY 21
Net Profit After Tax
Actual Advanced Nutrition volumes
Advanced Nutrition volumes FY 18 forecast
The business has pivoted its strategy to be customer and demand-led but is still playing catch up while navigating significant macro impact.
COVID-19
POKENO INSTITUTIONAL INVESTOR SITE TOUR

SYNLAIT STRATEGY FY 24 – FY 28
CATEGORIES
OUR PRODUCTS
CHANNELS
OUR BUSINESS TYPES
RIGHT TO PLAY
OUR STRONG FOUNDATIONS
AMBITION
TO FY 28
RIGHT TO WIN
OUR COMPETITIVE ADVANTAGE MODELS
KEY ENABLERS
OF EXECUTION
Singapore
Malaysia
Thailand
New Zealand
Australia
Greater China
Philippines
Vietnam
Indonesia
GEOGRAPHIES
OUR GROWTH MARKETS
PURPOSE
AND CULTURE
MADE WITH
BETTER MILK
COMPETITIVE, TRANSPARENT
FARMGATE MILK PRICE
FAVOURABLE
ADVANCE RATE
AND NO SHARES
DIGITAL TOOLS
AND ON-FARM
SUPPORT
INDUSTRY AND
COMMUNITY
ENGAGEMENT
SPECIALTY
MILK
PREMIUMS
LEAD WITH
PRIDE™
1
5
3
7
2
6
4
8
PURPOSE
AND CULTURE
FOOD SAFETY, QUALITY,
TRACEABILITY AND SURETY OF SUPPLY
NEW ZEALAND
PROVENANCE AND
MARKET ACCESS
BASIC
PRODUCT
PORTFOLIO
ADVANCED
PRODUCT
PORTFOLIO
FLEXIBLE WORLD CLASS
MANUFACTURING FACILITIES
1
5
3
2
4
9
B CORP™ AND
MADE WITH
BETTER MILK
8
DEEP CHANNEL
EXPERTISE
7
On-Farm
Excellence
Best In Class
Customer
Engagement
Disciplined
Product
Innovation
High
Performance
Culture
Systems, Tools
and Processes
World Class
Manufacturing
and Supply Chain
Infant
Nutrition
Adult
Nutrition
Commodity
Powders
B Corp™
Score of 105
Advanced
Nutrition
CUSTOMERSFARMER SUPPLIERS
Advanced
Ingredients
Farmer Net
Promoter Score
Top Quartile
FoodserviceFoodservice
Cream
AMF and Butter*
IWS Level 2
Ingredients
Customer Net
Promoter Score
Top Quartile
Staff Engagement
Top Quartile
Return on
Capital 15%
Food Safety
and Quality
Regulatory
Know-How
Highly Utilised,
Efficient Plants
Advanced Nutrition
and Foodservice
Know-How
Integrated
Value Chain
Sustainability
Credentials
Cream Cheese*
BEST IN CLASS
CUSTOMER ENGAGEMENT
6
Our Purpose – Doing Milk Differently For A Healthier World
* TBC, further o
pportunities being explored.
POKENO INSTITUTIONAL INVESTOR SITE TOUR

Naiche Nogueira
Director of Advanced Nutrition
ADVANCED NUTRITION AND
FOODSERVICE MARKET INSIGHTS
Abby Ye
President of China & Director of Foodservice

Naiche Nogueira
Director of Advanced Nutrition
ADVANCED NUTRITION

ADVANCED NUTRITION STRATEGY FY24 – FY28
CATEGORIES
OUR FOCUS PRODUCTS
CUSTOMERS
OUR FOCUS PARTNERS
RIGHT TO PLAY
OUR STRONG FOUNDATIONS
AMBITION
TO FY28
RIGHT TO WIN
OUR COMPETITIVE ADVANTAGE MODEL
KEY ENABLERS
OF EXECUTION
GEOGRAPHIES
OUR GROWTH MARKETS
Our Purpose – Doing Milk Differently For A Healthier World
Early Life
Nutrition
Adult
Nutrition
Advanced
Ingredients
Flexible Protein
Sources
Base and
Consumer
Powders
Consumer
Beverages
Malaysia
New Zealand
Australia
China
Philippines
Vietnam
Indonesia
Food Safety
and Quality
Highly Utilised,
Efficient Plants
Regulatory
Deep Category
Knowledge
Sustainability
Credentials
Nutritionals
Know-How
PURPOSE
AND CULTURE
FOOD SAFETY AND
QUALITY, TRACEABILITY
NEW ZEALAND PROVENANCE,
MARKET ACCESS AND
SURETY OF SUPPLY
FLEXIBLE WORLD
CLASS FACILITIES
AND OPERATIONS
FLEXIBLE PROTEIN
CAPABILITY
1
3
2
4
9
MADE WITH
BETTER MILK
AND B CORP™
8
Gross Margin
of $200m
Diversified
Customers, Markets
and Categories
Customer Net
Promoter Score
Top Quartile
Staff Engagement
Top Quartile
Sales Volumes
of 75,000 MT
IWS Level 2
SEA Local
Leaders
Chinese Local
Leaders
Strategic
Multinational
Partners
On-Farm
Excellence
Best In Class
Customer
Engagement
Disciplined
Product
Innovation
High
Performance
Culture
Systems, Tools
and Processes
World Class
Manufacturing
and Supply Chain
BEST IN-CLASS
CUSTOMER ENGAGEMENT
7
TURNKEY CONSUMER
PACKAGED SOLUTIONS
6
5
EXPERT NUTRITION AND
SCIENCE-BASED SOLUTIONS
POKENO INSTITUTIONAL INVESTOR SITE TOUR

ADVANCED NUTRITION – LIFE STAGE NUTRITION
EARLY LIFE NUTRITIONADVANCED INGREDIENTSADULT NUTRITION
Lactoferrin and
specialty ingredients
Maternal
nutrition
Sports
nutrition
Infant
nutrition
Clinical
nutrition
Children
nutrition
Active
nutrition
Healthy
ageing
POKENO INSTITUTIONAL INVESTOR SITE TOUR

New Zealand
Infant: $0.1 B (5%)
Australia
Infant: $0.7 B (4%)
Indonesia
Infant: $2 B (2%)
Malaysia
Infant: $0.6 B (3%)
Vietnam
Infant: $2 B (5%)
Thailand
Infant: $0.9 B (3%)
China
Infant: $23 B (0.5%)
South Korea
Infant: $0.2 B (1%)
Japan
Infant: $0.5 B (-2%)
Philippines
Infant: $0.9 B (2%)
EARLY LIFE NUTRITION – APAC
APAC total market value: US $31 B (CAGR 1.3%)
Source: Eruomonitor, Allied Market Research. Market Value is for tracked markets only.
Notes: CAGR is estimated from 2020-2026, ELN includes Stages 1-4
LOW CATEGORY GROWTH
PREMIUMISATION
RANGE EXTENSIONS
TO CHILDREN’S
POKENO INSTITUTIONAL INVESTOR SITE TOUR

EARLY LIFE NUTRITION – CHINA
Largest global market at 49% of global share
Domestic vs import
12
8
4
16
00
2
4
6
8
10
12
20
14
201420172021201520182022201620202019e-2023
Domestic
57%
International
43%
2023
Domestic
40%
International
60%
2014
Birth rate
Marriage rate
Birth rate
(millions)
Marriage rate
(millions)
Marriage and birth rates
Source: Eurom
onitor, Statista, Chemlinked 2023, Macquarie 2022
N
otes: CAGR is estimated from 2023-2028, ELN includes Stages 1-4
POKENO INSTITUTIONAL INVESTOR SITE TOUR

Australia
Adult: $1 B (9%)
Indonesia
Adult: $0.7 B (8%)
Malaysia
Adult: $0.1 B (8%)
Vietnam
Adult: $0.3 B (8%)
Thailand
Adult: $0.5 B (8%)
China
Adult: $7 B (7%)
South Korea
Adult: $1 B (8%)
Japan
Adult: $2 B (7%)
Philippines
Adult: $0.3 B (8%)
APAC total market value: US $13 B (CAGR 8%)
ADULT NUTRITION
AGEING POPULATION
PREVENTATIVE
NUTRITION
INCREASED SPEND
ON NUTRITION
Source: Euromonitor. Market value is for tracked markets only.
Note: Graphic shows major significant market only.
POKENO INSTITUTIONAL INVESTOR SITE TOUR

NUTRITION FOR WELLNESS
PRODUCT MATURITY
Dairy and plant-based milk sources
Fortified
powders
Healthy
ageing
Whole milk
and calcium
Broad
support
Gut health
Formulated
support
Basic
fortification
Targeted
support
Weight loss
Complete
support
POKENO INSTITUTIONAL INVESTOR SITE TOUR

WHY IS ADULT NUTRITION SYNLAIT’S
NEXT GROWTH OPPORTUNITY?
Demographic changeLeverages dairy and
plant-based capability
Synergises with
infant capability
Increasing nutrition
and health awareness
Accelerated
awareness and trust
POKENO INSTITUTIONAL INVESTOR SITE TOUR

FOODSERVICE
Abby Ye
President of China & Director of Foodservice

FOODSERVICE STRATEGY FY24 – FY28
CATEGORIES
OUR FOCUS PRODUCTS
CHANNELS
OUR FOCUS BUSINESS TYPES
RIGHT TO PLAY
OUR STRONG FOUNDATIONS
AMBITION
TO FY28
RIGHT TO WIN
OUR COMPETITIVE ADVANTAGE MODEL
KEY ENABLERS
OF EXECUTION
GEOGRAPHIES
OUR GROWTH MARKETS
Our Purpose – Doing Milk Differently For A Healthier World
BakeryBeveragesOEMFoodservice
Cream
Butter
(TBC)*
Cream Cheese
(TBC)*
FLEXIBLE WORLD
CLASS FACILITIES
AND OPERATIONS
DEDICATED
NPD CAPABILITY
1
5
2
4
FOOD SAFETY AND QUALITY,
TRACEABILITY AND SURETY OF SUPPLY
NEW ZEALAND
PROVENANCE AND
MARKET ACCESS
Food Safety
and Quality
Integrated
Value Chain
Dedicated
NPD Capability
Highly Utilised,
Efficient Plants
Sustainability
Credentials
Dairy
Know-How
China
Philippines
Vietnam
Indonesia
MADE WITH
BETTER MILK
AND B CORP™
8
DEEP CHANNEL
EXPERTISE
6
BASE
PRODUCT
PORTFOLIO
3
Category
Diversification
IWS Level 2
Gross Margin
of $24m
Sales Volumes
of 22,000 MT
Customer Net
Promoter Score
Top Quartile
Staff Engagement
Top Quartile
On-Farm
Excellence
Best In Class
Customer
Engagement
Disciplined
Product
Innovation
High
Performance
Culture
Systems, Tools
and Processes
World Class
Manufacturing
and Supply Chain
PURPOSE
AND CULTURE
9
BEST IN-CLASS
CUSTOMER ENGAGEMENT
7
Malaysia and Singapore
* TBC, further o
pportunities being explored.
POKENO INSTITUTIONAL INVESTOR SITE TOUR

CONSUMPTION CHANNELS
CAFESBEVERAGE CHAINSBAKERIES
POKENO INSTITUTIONAL INVESTOR SITE TOUR

WHY IS FOODSERVICE CREAM
SYNLAIT’S NEXT GROWTH OPPORTUNITY?
From New ZealandEntering fast
growing channels
An emerging
opportunity
Headed for
South East Asia
Potentially another plant
based opportunity
POKENO INSTITUTIONAL INVESTOR SITE TOUR

FAST GROWING CHANNELS
•China bakery growth 9.9%
•Beverage growth 13.4%
EMERGING OPPORTUNITIES IN CHINA
•Central kitchens growing at 25%
•Frozen bakery segment – less than 10% market penetration (US is 70%)
•Pre made dish segment – just 8% market penetration (Japan at 60%)
THE DATA SPEAKS FOR ITSELF
NEW ZEALAND CREAM IMPORTS TO CHINA
•39% of total import volume (cream)
•44% of total import value (cream)
•$8.3 billion export market to China
NEW ZEALAND CREAM IMPORTS TO CHINA
•
•
•
POKENO INSTITUTIONAL INVESTOR SITE TOUR

CHINA’S CREAM MARKET
HAS SIGNIFICANT POTENTIAL
New Zealand accounts for
58% of all China’s cream imports
New Zealand
France
United Kingdom
Spain
Ireland
Netherlands
Belgium
Australia
Germany
Others
China Import Statistics – Cream
2022 Chinese cream
market: 250,000MT
For comparison: Australia accounts
for just 2% of China’s cream imports
58%
POKENO INSTITUTIONAL INVESTOR SITE TOUR

JOYHANA CREAM IN MARKET
South China –
Shenzhen/Guangzhou 深圳/广州
East China –
Shanghai 上海
North China –
Beijing 北京
West China –
Chengdu 成都
POKENO INSTITUTIONAL INVESTOR SITE TOUR

CUSTOMER FEEDBACK
“
“
“
The whipping rate of Joyhana is quite good,
a good option for mousse cake.
Looking forward for more creations from
Joyhana cream!
Joyhana cream goes very well with fruit taste.
POKENO INSTITUTIONAL INVESTOR SITE TOUR

QUESTIONS
Naiche Nogueira
Director of Advanced Nutrition
Grant Watson
Chief Executive Officer
Abby Ye
President of China & Director of Foodservice