Deoleo : Press Release H2 2017

Deoleo reduced its losses by 90% in 2017

• • The company has practically reached the break-even point in the operating outcome (EBIT).

• • Non-recurring expenses decreased by 60% and operating expenses were also reduced as a result of the efficiency plans implemented.

• • The high prices of olive oil and the evolution of the euro / dollar exchange rate weighed on EBITDA, which fell by 32%.

Madrid, February 22, 2018. - Deoleo reduced its losses by 90% in fiscal year 2017, to 18.4 million euros, compared to the negative result of 179.4 million registered in 2016. Thus the company has practically achieved the break-even point in the operating result (EBIT), compared to the losses of 131 million the previous year.

Sales were steady during the year despite the high prices of raw materials. The turnover was 692.3 million euros, a figure practically equal to the previous year, although volumes were down slightly.

The average price of extra virgin olive oil in Spain was € 3.8 / kg, a high value that has negatively influenced consumption in the main international markets. In our country, the consumption of olive oil fell by 6%, as did world consumption, while in the United States it contracted by 2%. Only Italy grew a timid 1%, according to Nielsen consulting data.

Deoleo's EBITDA was reduced by 32%, to 31.3 million euros, due to the progressive increase in the price of the raw material and the difficulty of passing on these increases to customers, as well as a more restrictive criterion in the accounting of non-recurring expenses.

Even so, thanks to the savings and efficiency plan implemented throughout the year, operating expenses were reduced and non-recurring expenses dropped by 60% to 14 million euros. Similarly, financial results improved by 26% in the year.

On the other hand, net financial debt grew slightly with respect to 2016, by 4%. However, good working capital management has allowed to maintain the debt at reasonable levels, as well as cash and revolving and factoring lines utilization levels that ensure sufficient liquidity as well as the ability to expand the supplier base. As of December 31, 2017, Deoleo continued to comply with all its financial covenants.

Outcome by business units

The Southern Europe unit, and especially Spain, evolved very positively during the year. Despite the complicated environment due to high prices, with decreases in consumption, the volumes were steady, which has allowed to recover market shares. Thus, EBITDA grew by 7%.

International Markets also showed positive performance in both sales (+ 10%) and profitability (+ 16%), driven by good results in India, the Middle East and Mexico.

In North America, during the fourth quarter of the year, marked by high prices and by the impact of the exchange rate, Deoleo's brands regained presence in the Canal Club, a wholesale channel where the company has regained distribution.

In Northern Europe, the level of distribution could not be recovered during 2017 due to the rise in prices, which has affected the profitability of this business unit.

Conclusions

The high price volatility of recent harvests is the ideal breeding ground for a short-term business concept, which seeks volume as opposed to value. This trend towards the white label and the first price brands is trivializing a high value product with great potential such as olive oil.

In Deoleo, however, we are betting on quality and value; proven by the 27 medals that the group's brands, Carapelli and Bertolli fundamentally, have obtained in some of the most prestigious international olive oil contests, which is an endorsement of this strategy.

As part of this strategy focused on quality and value, Deoleo continues to close in on the source through agreements with farmers (UPA) and moving forward in other agreements to achieve integration and value in the supply chain.

Deoleo is a Spanish multinational food company, world leader in the marketing of olive oil, with presence in more than 80 countries on five continents, factories in Spain and Italy and commercial delegations in 15 countries. Deoleo has leading brands around the world, such as Bertolli, the most sold brand in the US, Carapelli and Sasso; and the Spanish Carbonell, Hojiblanca and Koipe.