Synlait Milk Limited (SML) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Synlait's Half Year Results Conference Call. My name is Hannah Lynch, Synlait's Head of Milk Supply, Strategy and Corporate Affairs. And it's my pleasure to be joined by our acting CEO, Tim Carter; and our CFO, Andy Liu, here today, who will provide a short update on our results presentation. [Operator Instructions]. Otherwise, over to Tim to deliver today's results.

Thank you, Hannah. Welcome to our half year results investor presentation. I'm pleased to share this result as acting CEO. Synlait has returned to profitability in the first half. This is an encouraging progress. It has been achieved through focusing on 3 priority areas. Firstly, the team has been focused on the fundamentals of manufacturing operations. This includes cost, quality and yield. Secondly, our team continues to work hard to rebuild farmer trust and confidence. The conversations we are having have been robust and are growing in positivity. Thirdly, we have prioritized delivery and the acceleration of new business opportunities for both existing and new customers. This result is a considerable commercial achievement, and we are really proud to share it with you today. Our progress includes an EBITDA of $63.1 million, which is just above the guidance range we provided in January 2025. Group NPAT is $4.8 million, and we are pleased to report a return to profitability, as I mentioned. Lastly, net debt has reduced by 29%, largely due to the equity placement supported by Bright Dairy and The a2 Milk Company. Looking at results at a glance. If you turn to Slide 3, you see more of our key metrics at a glance. These metrics all have green arrows above them, reflecting the progress made over the last 6 months. In addition to the increase in NPAT and EBITDA and improved net debt, our revenue is up 16% to $916.8 million. This is a result of an uplift in Advanced Nutrition demand, optimization of our North Island assets, higher commodity prices and improved foreign exchange performance. Our farmer suppliers have seen significant increases in our forecast milk price for the year. Base milk price remains forecasted at $10 per kilogram of milk solids, a record figure. In addition, Canterbury farmer suppliers who do not have a cease in place, will receive secure premiums beginning with $0.20 per kilogram of milk solid this season. Add this to the milk incentives many of our farmers receive and the average forecasted milk payment for Synlait suppliers in Canterbury this season is $10.48 per kilogram of milk solid. Slide 4 has a more detailed overview of our financial result. It shows Synlait is making progress on the road to recovery. Our adjusted NPAT is an uplift of $26.1 million compared to half year '24. We also had a substantial improvement in our EBITDA, which increased by $43.2 million. Solid trading performance has enabled us to optimize operating cash flows and reduce debt. Our recovery is spread across all of our business units, including Advanced Nutrition, Ingredients and Consumer. We are focusing on the right things and delivering widespread results, which is great news. I will now invite our CFO, Andy Liu, to take us through financial performance for our business units in more detail.

Thank you, Tim. Good morning, everyone, and thanks for joining us. I am pleased to share with you these results. Slide 6 has an overview of our Advanced Nutrition business. This business has experienced remarkable growth and success. Revenue increased by 20%, amounting to $45 million, with sales volumes rising by 28%. Gross profit saw an impressive rise of 80%, achieving $59 million. This growth was driven by demand from multiple customers along with cost efficiency. This positive result highlight why Advanced Nutrition continues to be a strategic business category for Synlait. Let's move on to Slide 7. Ingredients also saw a notable uplift. Revenue is up by $49 million or 17% and gross profit has increased to $14.3 million, up from $1.4 million year-on-year. Key improvements include better foreign exchange management, improved quality delivery, favorable stream returns and enhanced cost efficiency. All of these have helped a significant improvement of the Ingredient performance, which is something we can celebrate. On to Slide 8 now. You can see our Consumer business remains stable. Sales slightly decreased this year half year, but our gross profit increased by $2.2 million. This was a result of a focus on cost control and improved production efficiency, which includes some capital improvements, which we have begun to provide returns. Turning to Slide 9 now, please. These are the results of our food service category, which mostly related with UHT cream to China. While our volumes increased by nearly 115% compared to half year '24, our margin performance was well below expectations because of high fat pricing. That concluded in a $1.4 million profit reduction year-on-year. The good news is, demand is expected to continue increasing. The key focus for management is to ensure this business unit make a valuable contribution to Synlait's bottom line in the future. My last slide, Slide 10, looks at cash flow and net debt. In terms of cash flow, our operating cash performance is the best it has been since half year '21. I hope that provides confidence in Synlait. It includes a $43 million lift in trading performance and another $40 million from working capital enhancement. In the first half of FY '25, we limited our CapEx to $12.7 million. That is the lowest level of spending since 2017. Our focus instead is on optimizing our current asset. Even with increased advanced payments to supply -- to support our farmers, we have successfully reduced our net debt to $392 million. We are making great progress in reducing debt. By the end of the financial year, we believe that we will have reduced it even further, placing us in a more solid financial position. So in summary, we are reporting an encouraging result. It shows real progress. Our team is delivering a real turnaround across all our business unit. Finally, we want to reassure you our efforts will continue. We are committed to making the annual results as strong as possible. Now I'd like to hand back to Tim.

Thanks, Andy. We are now on Slide 12, and I'll start with an update on our Advanced Nutrition business. This continues to be a strategic focus for us. It is pleasing to see strong growth in sales volumes have emerged in Advanced Nutrition. We have ongoing interest in our Nutrabase range and have recently begun commercial sale of this range. Future opportunities for us are significant. After a softer year, we have seen lactoferrin pricing stabilize recently. Our team has been expanding our customer base for this product. We continue to manufacture Advanced Nutrition product in a range of formats for our customers. This includes cans, sachets and pouches. Some of these are non-dairy hybrid product nutrition products, which are manufactured at our Pokeno site. Our relationship with the a2 Milk Company continues to strengthen. We're committed to working with the a2 Milk Company to support the growth of the growing infant formula opportunities, which have been identified. If you turn to Slide 13, our President of China and Director of Foodservice, Abby Ye and the team are continuing to drive a range of opportunities. Our Foodservice business growth and expansion has been significant over the last year. Our expansion into Southeast Asia has continued largely due to our partnership with Uhrenholt. We recently also entered Hong Kong through this partnership. The second-generation formulation UHT whipping cream was developed late last year and has successfully moved through testing. Sales into market are now underway. We expect production and sales volume for the UHT whipping cream will continue to increase. We have the capability and as importantly, the capacity to support this at our Dunsandel factory. Moving on to Slide 14 and Ingredients. In support of both Advanced Nutrition and Foodservice, we continue to have a strong Ingredients business led by our Chief Revenue Officer, Naiche Nogueira. Following the exit of raw milk in the North Island and with Advanced Nutrition activity, there's been a reduction in ingredients production volumes. However, our sales performance has increased. We have had favorable stream returns across the period and improved management of our foreign exchange. We continue to leverage strong customer relationships for new opportunities to expand ingredient sales. Our team is focused on extracting high-value returns across our range. Touching on Dairyworks, and this is Slide 15. Many thanks go to Dairyworks management and the team for your efforts while acting CEO at Synlait. The management team has led the business, ensuring we continue to experience strong growth and expanding market opportunities. Across the New Zealand and Australian markets, our sales volumes and growth have continued to increase with 23% growth in New Zealand and 28% in Australia. Our brand refresh activity is complete with the new Alpine brand now in the market. A recent highlight is the new distribution agreement Dairyworks signed in February, which saw Dairyworks expand into Vietnam. This strategic partnership introduces 14 Dairyworks branded products to the market across 87 stores. Moving to Slide 16 and talking about milk supply and on-farm excellence activity. Strengthening our future milk supply is a priority. Our goal is to show every farmer why Synlait is a valuable partner. The conversations we are having with farmers are really positive. We know farmers are watching our performance and the results today with interest. We are making progress with milk retention. The majority of our farmer suppliers are not under ceased. This is a significant improvement in our position from 6 months ago. We are also very comfortable with our forecasted milk supply for FY '26. These reversal numbers are expected to increase ahead of the 31st of March, which is the final day for farmers to reverse their seed and take advantage of all of the newly secured milk premiums. It is also worth noting that interest from potential new farmer suppliers has exceeded expectations over this period. Our on-farm team is doing an outstanding job in this space, bringing on the week ahead. So let's talk about maintaining momentum. As we look to the second half of FY '25, our priorities are straightforward. Our 3 priorities for the second half are: firstly, to showcase Synlait's on-farm offering, ensuring Synlait is Canterbury farmers processor of choice. We know there is growing competition for milk in the region, and we are committed to being a key player. Secondly, we will seize every opportunity to create and deliver value for our existing and new customers. And thirdly, a laser focus on operational and cost efficiency will continue. The team and I look forward to welcoming Richard Wyeth when he joins Synlait in May 2025 as permanent CEO and the knowledge and experience, which Richard brings. Moving to guidance. We must maintain the momentum that Synlait has gained. We will continue to deliver every day, every week, every quarter, and every year. Our outlook statement reflects that. Our continued focus on doing the fundamentals well will enable Synlait to deliver a significant improvement in our EBITDA performance compared to the prior year. Progress in the second half of FY '25 will be slower than the first half, as we need to balance several opportunities and risks related to milk stream returns and foreign exchange. We will also continue to deliver ongoing operational cost improvements. You will note in the large pink box to the right of the slide. It is important to note, as I already have in prior slides that we are comfortable with our forecasted milk supply for the next financial year. The majority of our farmer suppliers are not under ceased, a significant improvement in our position 6 months ago. At this time, I'd like to open up the call to questions.

[Operator Instructions]. Your first question comes from Nick Mar with Macquarie.

Could you just talk to the net debt number, so the target range of $250 million to $300 million, I believe it was sort of $200 million to $250 million at the time of the equity raises. Can you just talk through the differences there, whether it's how it's calculated or what the moving parts are within cash flows that have seen that change?

Thanks, Nick. This is Andy speaking. So regarding the net debt, which we communicated for the full year, actually, if you can remember what we just shared for the half year, we are about $392 million. And what we expected the improvement can come from that our better improve for our inventory and also shift some challenges from the supplier advance payment to the, say, the normal payment terms together with the continuously trading performance, which can contribute it for the cash flow.

Yes. So my question was not from the first half to the second half. It was from the prior guidance for closing FY '25 net debt, which was $50 million lower across the range, and that was at the time of the raising. So what were the key factors that have changed since then? Is it mostly milk price and advance rates? Or is it something else?

No. Actually, I do remember last time when we communicated, this is regarding this $200 million to $250 million, we have the shareholder loss, which is not included. But now we try to make everything clear. So currently, when we talk about $250 million to $300 million, it's definitely included for the shareholder loss.

So the previous number of $200 million to $250 million didn't. So that means that the equivalent range would have been $330 million to $380 million and now you're at $250 million to $300 million. So it's now $80 million better. Is that what you're saying?

Yes. And the last time, it's really a bit less, it's not very clear because at this time when we stated, it's also we listed for the senior debt. So we just want to make it 100% clear regarding the net debt compared with senior debt.

Okay. Sure. And then just in terms of the EBITDA kind of outlook, when you're talking about the second half progress will be slower than the first half, are you talking sort of the absolute dollar value in the second half for EBITDA will be less than the first half? Or are you talking percentage increase? Or are you talking some other kind of delta in terms of how you talk about that financial progress? I'm just trying to understand what you're talking about in that because if you then took the net debt number and the net debt-to-EBITDA covenant ratio, it implies a sort of very, very low EBITDA number to meet compliance. So obviously, you should be above that, but just trying to get some idea of the range.

Yes. So, Nick, I'll try and make it really simple. Don't take the first half of EBITDA and times it by 2 is what we're saying. We do have headwinds coming at us. So it will be significantly improved year-on-year for the full year, but on absolute dollars, if you times it by 2, that's not accurate. Does that make sense?

Okay. No, that's fine.

Your next question comes from Matt Montgomerie with Forsyth Barr.

Well done on a solid set of numbers. Just on Nick's question there. I think your guidance for the second half is in the context of sort of stream returns and FX. Are you able to quantify what the 1H result benefited from both of those factors year-on-year?

And Matt, just to try to clarify, your question is more for the second half of the year regarding the stream return FX other than the first half, right?

Sorry, Andy. In the first half -- in your first half EBITDA, what was the benefit versus the prior year from FX and stream returns?

Okay. So actually, I only have the FX numbers in my mind, and I can come back to you for the full returns. So for the FX, actually, the impact is around $14 million to $15 million. And this is mostly related with the Ingredients business. If you remember last year, for the full-year result, we communicated we had some shortages or shortfalls for the foreign exchange, and this really shows for the moment, the team, and the management is focused on foreign exchange and happy to see this good outcome.

Okay. So just to clarify, the first half versus last year benefited by $14 million to $15 million in terms of FX.

Yes.

Okay. Then just on the North Island, I think previously, you had commented on sort of the drag or the losses that, that plant had been contributing. Are you able to talk to that in the first half?

Yes. So look, I think when we talk about the North Island asset, there has been a drag. I think we made a pretty clear decision early on that there was going to come a plant for Advanced Nutrition, which means we didn't need the raw milk. And so by [ that ] raw milk has allowed us to really reset that cost base on that asset. And so what we've done is we've improved roughly 30% where we were for the first half. So we're on, if not slightly ahead of what we call budget for that plant for FY '25 first half.

And can you quantify what the drag was in the half?

Not specifically, you know that. So that's pretty sensitive information.

Your next question comes from Adrian Allbon with Jarden.

Just wondering if we can come back to Page 6 of the presentation. And can you just sort of bridge the performance in Advanced Nutritional a little clearer for us, like particularly in the cost per metric ton. Like I noticed the overall gross margin per metric ton is sort of at $2,000 or close to $2,900 coming off a PCP of kind of closer to $2,000. And then also within that context, I guess your inventory provisions are quite high, like $22 million versus $10 million in the PCP.

Yes. This is Andy speaking. So actually, I can just give you a bit of color for that. And afterwards, maybe Tim can just give you some other. So regarding Advanced Nutrition, this is exactly the same as what we communicated before. This is mostly driven by the product mix. That's why the cost per metric ton has dropped. This is the first reason. Secondly, the reason is that due to the -- based on the pricing model, some of the ingredient material we pass through from the -- our supply to our customers. That's why this is the main driver for this cost reduction. So this is the first point. Secondly, sorry, what's the question? Inventory, yes. So coming back to the inventories because, as we said, new customers, new demand, so this is more related with this ramp-up of some additional cost. And also another thing actually is not related with Advanced Nutrition, it is more what is from the Ingredients. So what we said before is that the second half year, one of the things balancing is for the headwind of the stream return. And here, just at the end of January, we already see some kind of challenges. That's why this is more like what we taken from inventory provision for the net realized value booked.

Adrian, just talking to your cost per metric ton, 2 drivers of that decrease. Volume, you've seen that we've talked about that strong volume coming through. But that's actually been coupled with, I guess, a relentless focus on conversion costs and the drivers of conversion cost. We're able to get more through those lines at a less cost and whether that's ship structures, consumables, all those sorts of things, those fundamentals that good businesses focus on every day. And so when you get those 2 combined, you start getting those benefits. And I'll go as far as to say, we should be able to get that lower again, real focus in that area.

Okay. So just -- sorry, there's quite a lot in that. I guess there's a reason why the question has quite a lot of answers. So in terms of -- if we just start with the provisions, were they mainly -- is the big uplift in provisions mostly related to ingredients and uses on stream return products?

Yes, I should say half, half. Half is because of what you just mentioned and other is for the Nutrition ramp up.

Okay. And then probably just to simplify my next question, like as a sort of for modeling purposes, would we expect the gross margin per ton that you've achieved in the first half to be closer to what you should achieve going forward, like second half and into next year, given all the other things that you mentioned?

Yes, Adrian.

Okay. Very good. Next question, just on the cessation notices and the milk supply. Like I know you've made the comment that -- like clearly, there's evidence that you've made demonstrable progress over the last 6 months and you're comfortable with the FY '26 milk supply. When do you think you'll be in a position like -- I noticed in the growing concern sort of commentary, when do you think you'll be in a position to sort of have comfort around the FY '27 balance? I mean it's kind of important also in the context of like you've got quite a lot of debt refinancing. Firstly, the bank debt in October and then you've got the Bright loan that follows that in July of the next year.

Look, we're reasonably comfortable now with '27. As we've said, the majority of our milk is not under cease. A lot of our farmers we're looking for today that are under cease still, we're looking for today in today's results. And so we're pretty confident -- we're very confident that we've got momentum and that will take us through. So in that sense, look, we're in a really good spot from where we were 6 months ago. When we -- Andy met with our banks just recently, really positive signs coming out of that in terms of one, the results, but more importantly, as we look forward and the momentum we've got. So across those 2, a lot more confidence today than where we were 6 months ago for sure.

Okay. So that would be -- because I guess the statement in the accounts still kind of throws a bit of caution on FY '27. So you're saying, as you say here today, you've got good momentum against that statement?

Spot on.

Your next question comes from Marcus Curley with UBS.

I just wondered if we can have one more on that milk supply. When you say majority, it's obviously a pretty loose description. Could you give us a little bit of a range in terms of what the percentage is that you have at the moment secured?

Yes. So majority is majority. We have 204 South Island suppliers, right? What I can't give you is an absolute number of the commercial sensitivity with that. What I also say is the number is changing daily. And at the moment, it's probably changing hourly as we're working with our farmers and working that through. But right now, 204 South Island farmers, the majority aren't under cease. We have a very minimal amount that have already made their choice. And as I said, the rest of them, the feedback they've given us is, look, they're liking what they hear, but they want to see it, I guess, in black and white, which is what today is about. And over the next week, we'll be meeting with those specific farmers. And look, the momentum we have, we're really encouraged that we'll be in a good spot for '27 on milk supply.

And when is the cutoff date for the decision around milk supply in '27?

Yes. So look, we have 2 dates, March 31 with our revised secure milk premium that we put out in January, which is in effect $0.20 plus a 10,10, 10, that closes the 31st of March and then the straight $0.20 closes at the end of April.

And so at the end of April, is the close off for milk supply in '27?

Basically, by May, you have a close off, yes.

Okay. 1 May of this year?

Sorry, 1 June of this year.

All right. 1 June of this year for FY '27?

Yes, correct.

Okay. And secondly, I know your comments around the sensitivity of the North Island, but could you just give us some color? Is it loss-making at the gross profit level? Not asking for the level, but is it still a negative number?

So, it is still a negative, but it has improved versus a year ago.

Okay. Could you talk -- just extending that, the presentation talks about improvements in manufacturing cost. You couldn't quantify that. Previous presentations, you have talked to the overall level of manufacturing costs, I just wondered if you've got that to hand what the year-on-year savings in manufacturing costs were at absolute dollars?

Yes. So Marcus, actually, there were 2 kinds of main drivers for this manufacturing cost reductions or, let's say, optimization. So part of it is purely from absolute value point of view, we are talking about $2.6 million. But just bear in mind, this is based on our 28% or 25%, I don't remember the exact number for volume increase. So for the moment, I can only provide you the absolute value. But if we are talking about apple-to-apple base, I can calculate the number and get back. I will go back to get back to you later.

Yes, that would be useful in terms of what the absolute manufacturing cost basis moved by and obviously, collectively across the North Island and South Island. And then finally, just in terms of lactoferrin, again, normally, you'd give some sort of directional color. Could you talk about the incremental contribution to gross profit? I assume it's an increase for lactoferrin given you probably had inventory -- I think you had inventory on hand that you've probably sold down plus manufacturing. Can you give us any color on what lactoferrin contributed to the gross profit improvement in the half?

We probably can't right now. It's pretty commercially sensitive in terms of what you're asking. I think what we can say is the pricing have stabilized, pricing has stabilized for lactoferrin in the market. I think we're now more around $570 to $650 per kilo. So that's helped. Certainly, from a stock position, we're in a really good spot in terms of selling lactoferrin. So the actual question you're asking is materially sensitive, so we can't give that.

I heard about direction. So was the profit from gross profit from lactoferrin up or down year-on-year?

Just stable. As mentioned, actually, the price is more stable for a while. So that's why we didn't see big changes from a profit perspective.

[Operator Instructions]. Your next question comes from Stephen Ridgewell with Craigs IP.

And first of all, well done on the much-improved performance this period. I have a couple of questions. Look, first of all, I'm just trying to get a sense of how sustainable the 28% volume growth for Advanced Nutrition in first half '25 is? Can you give us a sense of how much of that growth roughly was due to restocking from your major customer during the period following some production issues over sort of June, July, August? And is that restocking now finished? And then relatedly, how much of that growth, 28% growth is kind of being driven by new customers at Pokeno and Dunsandel please?

I think the demand for -- I'll try and answer it in a couple of ways for you. Obviously, what you're asking is quite sensitive information, certainly from our customers' perspective. So I think from an Advanced Nutrition perspective, we're seeing good demand for the end of FY '25. It's solid demand. And you would have seen that through other results that will come through as well. So we're really confident we can meet that demand and realize that opportunity. In terms of new customer demand, look, it's relatively small but growing at a pretty good rate. And that's an encouraging part. And that's all in base powder as opposed to a canned finish. And so that is a multinational customer. And then in '26, we have 2 additional, I would call customers of scale that are coming through the process, whether that is the commercial trials, quality audits. So again, that outlook around that Advanced Nutrition base powder looks quite promising. So the team have done a great job to qualify these customers and resell some of these benefits to them.

Okay. So it sounds like it's comfortably under half of the growth has been driven by new customers, just reading between the lines.

Yes. Yes.

Okay. Cool. And then just in terms of your cautious commentary on the second half or more cautious commentary. I guess, can you outline at a high-level expectations for Dairyworks performance in the second half?

Sorry, can you just repeat that?

Are you expecting growth? So just in terms of the second half outlook, are you expecting improved performance from Dairyworks or reduced performance relative to PCP in the second half?

Yes. Look, expecting an improved performance again for the back half of Dairyworks. That business has strong momentum. We've talked about Australia, Southeast Asia. They're navigating the commodity prices well. They've got cost and optimization. We talked about some of the capital efficiency projects that have gone into there, and we're beginning to realize the benefit of those. So yes, they'll have a strong back half.

Okay. That's helpful. And then last one for me. Just on cost out, I guess, a year ago or 6 or even 9 months ago when the financial position of the company is a bit more in question, there were plans to take out a lot of cost from the business. I'm just wondering, to what extent does the strong result you've reported today reflect that cost out? And then is there sort of further cost out that you see material cost out you see sort of that the business can take out in the next period or 2?

Yes. So look, for the moment, we are on the way, still very focusing on the cost and definitely for the half year, we see some benefit, mostly focused on this consultancy fees and also some legal fees. Here in the business, it's very clear. We try to just do it by our own. And we see this can be a very long journey. And for the moment, we are on the way to further optimizing or reduce the cost.

I mean is there any even high-level quantification in terms of the potential to take cost out of the business? Are we talking the tens of millions or relatively small opportunities to take to further optimize? Just like a rough idea would be helpful.

Yes. So for the first half year that we have the number around, let's say, $2 million to $3 million, we should reduce, but this is already taking into account the inflation. So without inflation, it can be $3 million to $4 million for the half year. So for the full year its around $10 million something.

Yes. So I think to your question on going forward, what we've done is we've realized that we can operate at a ship structure or head count and improve on that. So Andy has talked about 2 to 3 now. I think there's a less further 2 to 3 as we head into '26, that we'll realize in the '26. It's funny when you start focusing on to get cost out, you start lift up a rock and you realize there's more value to be had in the value chain and other areas. But there's definitely more to be had, no doubt about it.

Your next question comes from Jonathan Snape with Bell Potter.

Can you hear me okay?

We can hear you, Jon.

Great. Look, I ask first one is probably the easiest, so I'll get that out of the way. The assigned receivables facility, I couldn't see any reference to how much that was utilized in the half. Was there much of a change relative to the first half position, given I think there's some references in there that you increase your sales to Woolworths, and I would assume that would have been in there. So is there any material change in that off-balance sheet facility?

Yes. Jonathan, I don't have a number for the moment, but definitely, I can send you some kind of numbers afterwards because for the moment, one I do remember, yes, we have some additional one, which is driving for the accounts receivable -- receivables. I will send you some information afterwards.

All right. Great. And look, just on the Nutritional side, I noticed the inventory position was down quite a lot, like it's probably the lowest in a few years. And the prepayments were also down quite materially half-on-half. I'm just trying to reconcile those 2 numbers coming down with forward-looking indications. I think, of where you think that business kind of goes because they don't kind of line up unless you intend on really ramping up production in the second half. Is that, I guess, the plan? Or because it does look like quite a low inventory position to exit the period.

So look, absolutely, you're spot on, well, from a Nutritional's perspective, we are ramped up. We'll continue to be ramped up to make sure that when we end the season and start the season, we're in a good spot for our customers. So yes, you're spot on. Lots of effort going into that area at the moment.

Okay. And I guess just as a quick follow-on around base powder in this half, was there much in terms of sales of just pure base powder?

Look, there's -- our new customers that we brought on our base powders. So that's certainly been helped a lot. But coming back, can certainly they have dominated coming through. And as we said, we need to make sure we've got the right appropriate stock cover for end of season to beginning of the season. But yes, that Advanced Nutrition base powder has increased due to the new customers that have come on board.

Okay. And that was almost negligible in the PCP. Is that right, off memory?

Say that again, sorry?

There was next to none of that in the first half of last year. Was there just pure base...

Yes. You're right. The new customer that I'm talking about has only come on in '25. Yes, correct.

There are no further questions at this time. I'll now hand back to Hannah Lynch for closing remarks.

Thanks, everyone, for your engagement and participation in today's call. As always, if there's any follow-ups, feel free to reach out to me directly. Otherwise, we look forward to connecting with many of you over the coming days. Thanks for joining us.

That does conclude our conference for today. Thank you for participating. You may now disconnect.