Thank you for standing by, and welcome to the Noumi Limited Fiscal Year 2023 Full Year Results Presentation. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to turn the conference call over to Mr. Michael Perich, the CEO. Mr. Perich, the floor is yours, sir.
Thank you. I'd like to welcome everyone to the presentation for the full year results for FY 2023 for Noumi Limited. It's a pleasure to be here with you today, and thank you for joining. I'd like to begin by acknowledging the traditional custodians of the land, which we meet today. I'd also like to pay my respect to elders, past and present.
The results will be presented today by myself and Peter Myers, Group CFO, who will go through the financial results of the company. We've already uploaded the presentation, and you can navigate to the slides as you choose. We'll talk to each of the slides and refer to the page numbers as we progress. Slide 3 is the agenda for today's call. We'll focus on the call-outs from the results and discuss the key elements of the company's evolution.
Pete will present the financial performance for the period. I'll then talk through the strategy of the company, followed by closing remarks, and will be available for questions at the end of the presentation. The key messages for today's call: We are proud of the progress we are making as we execute our plans. A record year in plant, continuing the performance from the first half. We have significant improvements in dairy, with the second half of FY 2023 delivering a positive result close to AUD 4 million. Although we are still slightly negative for the full year, we are moving in the right direction. Moving to Slide 5. The year has seen strong execution of our plans, and the transform and growth strategy continues to deliver improved results, with EBITDA of AUD 30.4 million, up 315% from FY 2022.
Under the macroeconomic conditions, this is a promising result and is a credit to the entire team. The plant-based milk business is up 12%, with an EBITDA of AUD 37.4 million, with continued growth in our MILKLAB brand in both domestic and export channels. The MILKLAB brand, across plant and dairy, has seen strong growth, up 11.1%. As mentioned at the start of the call, Dairy Nutritionals has also seen significant improvement, with EBITDA in H2 of AUD 3.8 million, near breakeven for the full year compared to the AUD 20.6 million loss in FY 2022. The Australian dairy industry faces significant pressure as we see the dislocation of the Australian farm gate milk price compared to the rest of the market. This is placing pressure on exports and bulk commodities.
The business continues to remain focused on the domestic market, with key customers in the export playing an important role, although we are challenged with the current pricing structure. Reforming the market needs to occur to protect the overall Australian industry. Operating cash flows for the year continue to show improvement. On Slide 6, we present the key financial metrics. As already mentioned, EBITDA is AUD 30.4 million, pleasingly up AUD 23.1 million from the previous year. Net revenue was up AUD 29 million- AUD 551.6 million. As we continue to rebuild the company, the statutory profit improved AUD 114.2 million to a loss of AUD 46.9 million.
Dairy Nutritionals revenue of AUD 389 million is up AUD 31 million, delivering an EBITDA loss for the full year of AUD 0.5 million. This is a result of our disciplined approach to focus on products with higher margins, delivering better returns. Revenue for the plant-based milk business of AUD 162 million was down AUD 2 million. The plant-based milk EBITDA was a record of AUD 37.4 million. This is a strong result and achievement we are proud of. Moving to Slide 8. As you'll recall, we continue to talk about our three-part reset, transform, and grow strategy. We're embedding the transformational changes in Dairy Nutritionals with a focus on the growth phase in plant-based. The company is focused on the great brands and world-class assets that we operate to produce our products.
Actions to transform your company are now well underway, with operational improvements across the business already driving improved sales and margins with our new values incorporated to all work practices. Those improvements provide a springboard to grow the business through three streams: products, channels, and geographies. Moving to Slide 9. Previously, I laid out the transformation program to deliver long-term growth.
We, like many others in manufacturing, have been focusing on continuing to build the business under the shadows of a number of headwinds, which have shifted, but in general are abating from the major lockdowns we faced during COVID. The team have performed superbly, and I'm super proud of the achievements. We wouldn't be in the position we are today without our dedicated team across our sites, locally and internationally. There are a number of highlights.
You will see we are executing against our strategy, and there are a few achievements that I wanna highlight. The corporate legacy issues continue to progress in line with usual timelines. Dairy and Nutritionals has performed well in H2 for FY 2023, with a focus on margin and operating efficiencies. To continue the growth, MILKLAB Oat is delivering post its relaunch, 89% sales growth in FY 2023. The plant-based business is firmly in the growth phase, anchored by our core brand, MILKLAB, and supported by Australia's Own. We continue to partner with distributors, locally and internationally as we drive further initiatives. The coming year is prime for investment back in the plant-based milk segment. I'll now hand over to Peter to go through the financial performance of the business.
Thank you, Michael. Good morning, and let me add my welcome to this Noumi results call. This is my second full year results call since joining Noumi a little over a year ago, and I'm delighted that we're able to report a continuation of the progress that we shared at the half year as we execute on our transform and grow agenda. Michael has summarized the key messages and our results for the FY 2023 year in the material that we released to the ASX this morning. We are pleased that our messages are becoming more consistent. Another record result for plant-based milks, more improvement for dairy on top of our achievements in the first half, with positive EBITDA in H2. But as Michael has made clear, we still have so much to do. We see opportunities to be pursued for our plant-based milks, both in Australia and overseas.
While the environment for dairy is more challenging, we are in a much stronger position to meet these challenges than we were a year ago. While industry conditions are dynamic, and we, like everyone else, are cautious about the macroeconomics, our results are improving, our story is more consistent, we are becoming stronger, and we are encouraged by our progress. Let me now turn to some of the specifics of the result. First, a few grounding comments. We have generally referred to our adjusted operating EBITDA numbers as being the most useful numbers for investors. If Mike or, Michael or I just say EBITDA this morning, that's what we mean. This number includes only continuing operations. It adjusts out the impact of AASB 16, the leasing standard, so the numbers are comparable with what we have previously reported.
It excludes all the one-off style restructuring amounts, such as impairment charges and things like the U.S. litigation expenses from the prior year. There is a complete reconciliation of all of these adjustments to the statutory numbers in the appendices at the back of the slide deck. Skipping to Slide 13, I'm pleased to report that all of our key earnings metrics on this slide have improved during the year and are all showing further improvement, in fact, since we reported our half-year numbers. Revenue up overall compared to the prior period, but with a few moving parts. Price increases in domestic dairy, lactoferrin sales up from a disrupted result last year. Export dairy down, as volumes of low-margin businesses were reduced, and in plant-based milk, MILKLAB up, largely offsetting the discontinued product line from last year.
Adjusted operating EBITDA of AUD 30.4 million is 4x last year's result, and margins were up despite significant cost inflation. The statutory loss was reduced, and it is less complicated. Last year, we had U.S. litigation costs of AUD 56 million and AUD 96 million of impairment charges. This year, while we had some runoff payments to make, there is no charge to the P&L for the U.S. litigation, and the impairment charge is lower, only AUD 8 million. While the statutory result we've reported is a loss, if we look at it before non-cash impairments and before the fair value adjustments on our convertible notes that are in our capital structure, we turn to small profit. As I noted a moment ago, there is a full bridge from EBITDA to NPAT in the appendices.
In terms of cash and capital, we've increased cash by AUD 2 million, and we've reduced our conventional debt by AUD 2 million, notwithstanding more than AUD 12 million of legal and settlement costs paid on legacy issues during the year. We have included a pro forma view of our balance sheet in the event that the convertible notes were converted, and conversion would obviously make our balance sheet much stronger.
And of course, our balance sheet does not include any value for our flagship MILKLAB brand since it was built from scratch. We consider the MILKLAB brand to be worth AUD hundreds of millions and growing. Moving to Slide 14, we see one of our major messages, another record result for the plant-based milks business, with EBITDA for the year up to AUD 37 million. There is a lot to be pleased about and still some opportunities to be pursued.
Growth in our key brands, MILKLAB plant sales up 10.3%. Growth in our margins, EBITDA margin increased to 23.1%, and growth in our range. The new Oat formulation is really accelerating, up 89% for the year. One of the keys to understanding the result is that in the prior period, it included AUD 17.1 million of revenue from brands previously distributed under license. As part of the U.S. litigation settlement last year, it was agreed that distribution would end. So in this year, we have largely replaced that revenue with sales of our own brand, MILKLAB. This change in mix enabled us to improve our margins and increase our earnings, notwithstanding that overall revenue was relatively flat.
Our operations team has contributed to the result, with yield losses halving in the FY 2023 year and with strong improvements in the second half. Procurement have also been able to source competitively, and as a result, input price pressures in our plant-based milks business are not as great as they are in the dairy business. Looking ahead, the consolidation of our Marrickville site into the Ingleburn site will save almost AUD 1 million annually. We continue to believe this business has a great future, albeit we do need to make our plans, recognizing the cost of living pressure on the Australian consumer. We have a great business with great brands and a great future.
Slide 15 showcases the other big highlight, the progress that we've made in dairy, with positive EBITDA in the second half, and for the full year, an AUD 20 million turnaround from last year's losses. Getting Dairy and Nutritionals to profitability is a critical element of the strategy. While the diversity in our portfolio has some advantages, each of our dairy and plant segments need to pursue their own development agendas. Plant has opportunities to invest and grow, and dairy must become more self-sustaining and not rely on plant earnings to support and fund the dairy agenda. And that's why this improvement in the dairy performance is so important. And as we unpack this turnaround, it's been achieved in the face of some real headwinds.
A big increase in milk price in FY 2023, significant input price increases in things like energy and packaging, floods, and export markets resisting price rises despite our increased costs. We have been very focused on product mix in favor of higher-margin products, on operating efficiencies, and on service, quality, and reliability. In the domestic market, we have worked constructively with our customers to rebuild our margin structure and adjust shelf prices.
Whilst we have great customer relationships in our China and Southeast Asian markets, we've had to approach pricing on the basis that we would reduce volumes where the margin structure was not profitable for us. As a result, our export volumes in H2 were almost half what they were in the prior year, but we were still able to deliver positive EBITDA in the second half.
The operations team has also contributed to the dairy result, with yield losses down to circa 5% in the FY 2023 year. Overall, conversion costs per liter have been below expectations, having regard to the lower volumes. Lactoferrin sales were up 15% for the year, and production volumes up 8%. Overall, therefore, for the year in Dairy and Nutritionals, we made strong progress. We're almost at break-even EBITDA for the year, an AUD 20 million improvement on the FY 2022 full-year result. And whilst we are looking to rebuild profitable volumes, the fact that we have positive EBITDA in H2, with long life volumes of less than 100 million liters in the half, is an important milestone on dairy's transformation journey. But whilst the result is progress, it is not yet success.
We are part of a dynamic sector operating in highly competitive global markets, and we must consolidate our improvements if we're to continue our journey. Finally, turning to Slide 16. Our cash flow performance improved as well in FY 2023, reinforcing the quality of our improved earnings. Active working capital management is a feature of these results. Inventory up only AUD 1 million despite cost inflation, receivables down AUD 7 million, and payables down AUD 8 million. Our approach to capital expenditure has also been very disciplined. Net bank debt, excluding leases and the convertible note, was repaid by AUD 2 million during the year, and cash was up AUD 2 million for the year. We finished the year with AUD 19 million in available cash and AUD 18 million of undrawn facilities.
The cash flow for the period includes almost AUD 30 million from the sale of our non-core shareholding in AFMH, of which AUD 25 million was placed in a security deposit to cover the future obligations under the U.S. litigation settlement that was finalized in FY 2022. Net finance costs, mostly interest, were AUD 19 million, not including any cash interest on the convertible notes, where interest was capitalized and rolled up for the period.
So to recap on the key financials, overall, EBITDA up fourfold, AUD 30 million for this year compared to AUD 7 million last year. Dairy and Nutritionals has delivered a turnaround of AUD 20 million in EBITDA. We adapted to lower export volumes with optimized mix and improved operating metrics, and another record result for our plant-based milks business, with strong performance from MILKLAB and with opportunities to expand our range and our footprint. And with that, I'll hand back to Michael for some further remarks.
Thanks, Peter. Moving to Slide 18, I'd like to talk further regarding our strategy. Our strategy is to develop high quality and innovative dairy and plant-based products, to meet the different nutrition and taste needs of our customers and consumers across life stages. We have five key strategic pillars: complete the Dairy Nutritionals turnaround, accelerate plant-based milk growth, deliver world-class supply chain, embed high performance culture, and build future growth platforms.
Through these five key pillars, we have developed strategic priorities to focus on. These drive the focus of the business to bring shareholder value. The strategic pillars are well established in our business, and we have a clear roadmap. With the results presented today, you can see that we've been able to just show strong progress. A number of priorities have already been executed.
I'd like to highlight a couple of priorities, some of the, these you've seen before, as we continue to transform and accelerate our growth. Build dairy into a profitable and growing business. Invest to strengthen and grow the MILKLAB brand, including investing to accelerate global market expansion. Embed Noumi culture and values. Unlock the plant-based milk growth through channel, range, and geographic expansion.
These priorities will assist in driving shareholder value. On Slide 19 is our strategy for the plant-based milk segment. As highlighted by Peter, we continue to see our own brands in plant-based grow year-on-year and deliver positive earnings across the group. From our results, you can see, plant-based milk overall sales lifted by 10.3%. MILKLAB Oat continued its strong growth, with sales nearly doubling to up 89%. Our focus areas are very clear.
The campaign, Made With, Made For Baristas, is helping us show our customers that MILKLAB, in our opinion, is the best product to partner with coffee. Our Milk, MILKLAB Oat product continues to perform for us and our customers. It is key to drive our range through the cafe segment. MILKLAB continued its collaboration with baristas through new marketing program, leveraging the new MILKLAB Oat formulation with increasing distribution and presence. Our big opportunity is to concentrate our effort in growing key international markets with attractive, attractive demographics and a strong coffee culture, where we can benefit from the skills and experience we gained from the establishment of MILKLAB in Australia. Working with the partners that will help drive a successful campaign is key to our strategy.
Activations and promotional activities will enable us to continue to build the brand, with sales in FY 2023 in excess of AUD 100 million in MILKLAB plant-based alone. We will accelerate our investment in the brand. This is a brand that we are proud of, a brand that originated and we developed in-house, a brand that is less than 8 years old. It is super impressive. We have been very systematic in building the reach and the value of the brand, and it has a great future. Moving to Slide 20. The dairy nutritional strategy is about operational efficiencies and margin growth. In light of the many challenges, as mentioned, we have seen a significant turnaround in the past 12 months, including reductions in waste and other operational efficiencies, but acknowledging that there is more to do.
Product innovation, once again, is also key, with new product releases during the year, providing consumers with products that deliver benefits across nutrition and taste. This is across the consumer Nutritionals and the long-life milk range. The research that we're doing with Lactoferrin will assist examining the health benefits of Lactoferrin, including the treating of coronaviruses and rhinoviruses. Our execution of working on delivering first-class service and quality to our customers is key.
This has been a real focus and will continue to be in the future. Providing service enables more strategic conversations with our customers. Our consumer Nutritionals portfolio has been strengthened with the integration of the operations into our Ingleburn site and future promotional activity, coupled with an updated portfolio. Vital Strength, Crankt, and UProtein being the key brands for this part of the segment.
Australia has seen a decline in milk production off-farm since 2002, with a 5% reduction nationally in FY 2023. Coupled with volatile global commodity price, we saw robust competition for milk off-farm. International competitiveness is a challenge for the Australian dairy industry. For our part, we are re-maintaining a strong, disciplined approach on volume and margin. We are working on our own operational efficiencies. Together with industry reform, we can ensure that our products remain competitive and attractive to international markets. Alignment of all industry participants is required to ensure longer-term success across the sector. For our part, we are in a significantly better position based on the actions that we have taken. Moving to Slide 21. Our ESG strategy is brought together in our integrated, Healthier Tomorrow plan.
This plan was released in 2022, following consultation with suppliers, business partners, and our own team. Our ESG strategy is integrated across our value chain, from dealing with our supply partners, to manufacturing, to delivery of our products to our customers. We are continuously improving processes to meet or exceed our ESG targets. I'd like to update you on a few achievements. Noumi is moving to have all packaging APCO compliant by 2025, and all MILKLAB and Australia's Own products are now compliant.
We have all our dairy farmers, suppliers, part of our food safety program, which helps them continue their stewardship of the land. With continuing engagement within our own team, we were successful in increasing our engagement scores by 4 percentage points, in line with our targets. We will continue to aim for a further 4 percentage point lift in the coming year. We are collaborating with our service providers to investigate potential solutions to reduce Scope 1 emissions, particularly in the space of biogas, as an alternative to natural gas for steam generation, required for long-life milk production.
This year, we have exceeded our target of 75% of our own brands carrying a minimum of a four-star health rating, with a result of 82%. As you can see, we are deeply embedding the ESG practices across all parts of our business. On Slide 22, with our trading outlook. Plant-based milk is firmly established in the growth phase. We expect the performance of our plant-based milk to remain strong as it benefits from demand in Australia and targeted overseas markets. We will invest in the continued growth of our MILK LAB brand to expand its range and distribution, both in Australia and overseas.
As presented, dairy has made significant progress in the domestic markets. Export competitiveness remains an issue for the Australian industry. Noumi will continue to embed the operational benefits of the transformation program and continue to focus on margin and cost control. While macroeconomic conditions create some uncertainty, the company remains positive about the progress. We're consolidating the progress that has been made in the past 12 months. We are focused on the execution of our strategy across products, channels, geographies.
We are doing what's in our control. We are setting up for medium to long-term sustainable growth. I'd like to thank everyone for listening today, and I want to reiterate that the significant transformation of your company is well underway. The results we are delivering today is a testament to that. There is still more work to do. We have a clear roadmap. Execution is key. From the board down, we are committed to the pathway forward, and we hope that this is evident. I want to thank all stakeholders within the business, not at least our staff. We would not be here today without them, and I want to thank them all for their effort. That concludes the formal part of the presentation. We are now available for any questions. Over to you, operator.
Okay, thank you, sir. We will now begin the question and answer session. To ask a question, you may press the star key, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time a question may have been addressed, you may withdraw your question by pressing the star key, then two. At this time, we'll just pause momentarily to assemble our roster. Again, if you would like to participate in today's Q&A, please press star then one on a touchtone phone. At this time, we're showing no questions. We'll go ahead and hand the conference call back over to Mr. Perich for any closing remarks. Sir?
Yep. No, thank you, and thank you again, everyone, for listening and, really appreciate everyone jumping on the call and stay safe. Thank you.
We thank you, sir, for your time, and to the rest of the management team for your time today. Again, the conference call has now concluded. Again, we do thank you all for attending. At this time, you may disconnect your lines. Thank you, take care, and have a great day, everyone.