LDC : Press Release - H1 2020-2021 Results

Sablé-sur-Sarthe, 25 November 2020

H1 2020-2021 Results

LDC Group proves resilient during the health crisis

Solid earnings across all divisions

Sablé-sur-Sarthe, 25 November 2020 - LDC Group (FR0013204336 LOUP) has released its consolidated H1 results for financial year 2020-2021.

Consolidated financial statements (IFRS)

	In €m		First- half			First- half			Change
		2020-2021			2019-2020
	Tonnage (Kt)	514.6	507.8	+1.4%
	Revenue	2,121.8	2,104.6	+0.8%
Gross operating income (expense)1	171.0	163.2	+4.8%
	As a % of revenue			8.1%		7.8%
Current operating income (expense)	89.7	88.4	+1.5%
	As a % of revenue			4.2%		4.2%
	Operating income (expense)	89.7	88.4	+1.5%
	Financial income (expense)	(0.4)	0.5		NA
	Group net income (expense)	66.6	65.6	+1.5%
	Cash flow 2	152.7	146.0	+4.6%

The consolidated financial statements were approved by the Management Board on 18 November 2020 and reviewed by the Supervisory Board on 19 November 2020. These financial statements were audited and the associated certification reports are currently being prepared.

1

Consolidated H1 2020-2021 revenue (from March 2020 to end-August 2020) amounted to €2,121.8 million versus €2,104.6 million, an increase of 0.8% compared to H1 2019-2020. On a like-for-like basis3 and at constant exchange rates, revenue fell by 1.7% to €2,068.7 million. Sales volumes picked up 1.4% including the most recent acquisitions (Ramon, Luché Tradition Volaille in France; Kiplama, Marnevall outside France). On a like-for-like basis, sales volumes were down 1.4%.

Poultry: resilience driven by home consumption

Excluding upstream business, the Poultry division generated revenue of €1,469.2 million, up 0.7% (+0.1% in volume terms). On a like-for-like basis, revenue fell by 0.9%, with a 1.6% decrease in tonnage sold.

Including upstream business, the Poultry France division posted revenue of €1,640.6 million, up 1.6%. On a like-for-like basis, revenue fell by 0.7%.

Amid the challenging conditions of the unprecedented health crisis, which saw institutional and commercial catering services shut down throughout the lockdown period, the Group bounced back quickly, mobilising its staff and production facilities in an effort to redeploy volumes initially targeting out-of-home consumption to the home consumption segment. By taking such quick, decisive action, the Group generated robust business in mass retail. This uptrend went hand-in-hand with an improvement in the product mix, thanks in large part to the Group's solid positions in processed foods and poultry cuts. H1 earnings were also helped by satisfactory performances in summer product lines.

International: business fuelled by acquisitions

Revenue in H1 (January to end-June for the division) came to €191.6 million, down 0.1%, while sales volumes increased by 8.6%. H1 earnings reflected a negative forex effect of €6.6 million. At constant exchange rates, like-for-like revenue climbed 3.3% to €198.32 million. The consolidation of Kiplama in Belgium (bought on 1 July 2019) and Marnevall in Hungary (acquisition completed on 1 March 2020) helped offset the impact of the health crisis on business over the period. As a result of this impact, prices fell in local markets due to a decline in exports. On a like-for-like basis and at constant exchange rates, business was down 8.7% in value terms and 2.0% in volume terms.

Catered Food: solid earnings in Retail Self-Service fresh and frozen products

In the wake of a 6.2% decline in Q1, the second quarter recorded an 8% gain in value terms as health measures were gradually lifted. Overall, H1 revenue was down just 2.9% to €289.6 million (+0.3% in volume terms). Performances in frozen goods and home consumption products (pizzas, exotic dishes, ready-made pastry) were satisfactory. Sales of brand-name products also held up well, offsetting the downturn in catering business.

2

Robust earnings across all divisions

The Group delivered gross operating income of €171 million, an improvement of 4.8%, in the first half. Current operating income picked up 1.5% to €89.7 million, including the rise in amortisation expenses associated with the investment policy, and can be broken down as follows:

• In the Poultry Division, after incorporating upstream business, current operating income came out at €74.6 million (-0.1%), on par with H1 2019-2020 and representing an operating margin of 4.5%G. In light of the circumstances, this was a strong performance. This solid resilience can be attributed to the agility and industrial competitiveness of the production sites, the orientation of the product mix and determination of employees.
• The International Division turned in operating income of €5.6 million, up 33% thanks to Marnevall's contribution and profits earned from production site specialisation and development of processed foods.
• In the Catered Food Division, strong showings in Retail Self-Service (fresh and frozen products) helped stabilise current operating income at €9.5 million, with a current operating margin of 3.3% of revenue.

After corporate tax, and factoring in a financial expense of -€0.4 million versus financial income of €0.5 million in H1 2019-2020 including investment plan funding, Group net income stood at €66.6 million versus €65.6 million in H1 2019-2020.

An even stronger financial position

At 31 August 2020, shareholders' equity stood at €1,435 million versus €1,335 million at 31 August 2019. Cash flow totalled €152.7 million and FCF4 was positive at €84 million. Net financial debt5 amounted to €82.6 million versus €(4.5) million at 31 August 2019. The Group will draw on this solid financial position to continue its investment plan (investments of €200 million scheduled over the financial year).

Outlook: price adjustments necessary to keep the industry afloat amid the ongoing health crisis

The Group is cautiously heading into the second half in an environment dominated by the Covid-19 crisis, the persistent rise in commodity prices and changing consumer practices for the holiday season. Against this backdrop, LDC has already proved it is capable of adapting, having shifted its manufacturing capacities to focus on home consumption channels.

Commodity prices are significantly on the rise as the second half gets under way, calling for 6% price hikes starting January 1st in order to keep the industry afloat. The outcome of negotiations to enact these price hikes will be a decisive factor for the Group's full-year results.

In light of all these considerations, the Group expects to see decreased earnings for the French Poultry Division. The International and Catered Food divisions should deliver performances in line with FY 2019-2020.

Overall, LDC has set a current operating income target of -5% to -10% for the full year.

3

Reasserted confidence

Over the next few months, LDC will remain focused on the take-over of Ronsard Group's assets and personnel (Ronsard is No. 4 in France with revenue of €160 million in 2019 and 750 employees at 7 production sites) in Bretagne, Aquitaine, Bresse and Ile-de-France. Note: by completing this deal, the Group will boost its processed poultry transformation capacities and expand the regional offers so highly appreciated by consumers. This is a big step for the Group that will see it strengthen its strategy of recapturing poultry imports for catering services and industry. The deal is subject to the approval of the Competition Authority.

In the Catered Food Division, the Group plans to buy a 60% stake in Asia General Food, a company specialising in the management of franchises that operate sushi and Asian food stands in the retail sector under the brand name SUSHI MASTER. With 2019 revenue of €11.5 million (+10%) and EBITDA of 9%, LDC is helping drive the transition of mass retail towards new selling models. The target set by the Group and its founding partners is to go from 30 to 80 stands in the next five years, representing revenue of approximately €40 million. Asia General Food will be consolidated by the Group from 1 November 2020.

LDC is thus as confident as ever in the future. Its longstanding commitment to the regions, dedication to local sourcing and international ambitions are paving the way for the development of the business going forward.

1: Gross operating income (expense): Net income (expense) + corporate tax + financial income (expense) + depreciation, amortisation and provisions - provision reversals - other current operating income and expenses 2: Cash flow: Net income (expense) + depreciation, amortisation and provisions - provision reversals - capital gains on disposals + deferred tax

3: Like-for-like: Based on the same scope as Year N-1, not including contributions from acquired entities.

4: FCF: free cash flow, i.e. cash flow generated by the business - investments over the period

5: Net financial debt: Cash and cash equivalents - financial liabilities (short and long term)

Note: detailed information is provided on the Finance page of the institutional website, under Investors Introduction.

Upcoming events:

Q3 2020-2021 revenue

6 January 2021 after market

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