AgM update, page-2

Outlook

FY20

• Overall, for FY20 we anticipate continued strong revenue growth across our key regions supported by brand and marketing investment in China and the US and the development of both capability and infrastructure to support in-market execution

• As an outcome of strategic gross margin focus, full year EBITDA margin % is now anticipated to be stronger than previously communicated and in the range of 29-30% with gross margin benefiting from:

  • − Improved price yield

  • − COGS reduction (including the effects of favourable FX)

    1H20

• For 1H20, we anticipate revenue in the range of $780 million to $800 million with growth demonstrating strong performance against strategy:

• − China label infant nutrition sales forecast to be approximately $135 million representing a growth rate of ~84%

• − CBEC1 infant nutrition sales forecast to be approximately $155 million2 representing a growth rate of ~54%

• − ANZ English label infant nutrition sales forecast to be approximately $350 million representing a growth rate of ~9%

• − US sales forecast to be approximately $27 million representing a growth rate of ~110%

• − Australia fresh milk sales forecast to be $75 million representing a growth rate of ~12%

• EBITDA margin % in 1H20 is expected to be higher than FY20 and in the range of 31-32% as a result of:

• − Increased cost of goods (including lactoferrin and packaging materials) in 2H20 and increased levels of strategically important trade marketing activation in China

• − Phasing of marketing and capability investment slightly weighted to 2H20; full year marketing investment expected to be approximately $200 million

  1Cross border e-commerce (CBEC)21H19 comparative for CBEC includes infant formula sales previously reported under UK segment

Annual Meeting | 6