Kri Kri Milk Industry S A : Comments on 6 months 2023 Results

Press release

KRI-KRI Milk Industry has released its interim financial statements for the first semester 2023.

Turnover amounted to €112.97m compared to €83.38m in H1 2022 (an increase of +35.5%). Basic profitability measures were as follows:

• EBITDA amounted to €28.72m compared to €7.50m in H1 2022,
• Profit before tax amounted to €26.18m compared to €5.07m in H1 2022,
• Net profit after tax amounted to €21.19m compared to €4.06m in H1 2022.

In the yogurt segment total sales increased by +44.3% in value and +16.4% in volume. Export yogurt sales show a strong growth of +49.8%, exceeding €49m. This boost in sales is contributed by the major markets of Italy and the UK as well as other countries such as Sweden, Austria and Belgium. As far as KriKri's profitability figures are concerned, they have recovered back to their normal levels. The EBIT margin has also improved significantly. That is mainly a result of economies of scale and the dilution of sales and admin costs, which are, for the most part, fixed.

Yogurt sales show a strong growth in the domestic Greek market too. Specifically, our sales increased by +37.8%, exceeding €38.7m. The current inflationary environment has led the overall market to a decrease in consumption volume (-0.6%), while the value increased by +12.1% [IRI data, Jan.-Jun. 2023]. At the same time, there is a strong shift of consumers to private label yogurts, because of their choices for value-for-money products. As a result, private label yogurt market share increased by +4.8 p.p. in volume, applying strong pressure on branded yogurts. That pressure has led KRI-KRI branded yogurts to a small market share loss (-0.2 percentage points), however that is lower compared to our main competitors [IRI data in value, Jan.-Jun. 2023]. In general, KriKri seems to benefit from those market developments, since it is the largest producer of private label yogurts in the domestic market. In terms of profitability, the gross profit margin reached 32.7%, which is 2 p.p. lower than in 2021. This is a result of the Company's decision to absorb part of the additional input costs, including transport and energy costs. Of course, economies of scale in yogurt segment led to high double-digit EBIT margin.

In the domestic ice cream market, our sales increased by +9.1% in value. Even though weather conditions were not favorable during the critical months for the ice cream sales (May and June), ice cream sales recovered in the rest of the summer season. Thus, for the entire season ice cream sales reached a +15% level compared to 2022.

This financial year, with the recovery of profit margins to their normal levels of 2021, and under a strongly inflationary economic and business environment, KriKri continues its initiatives aiming to support its consumers, farmers and employees. More specifically:

- Consumers: increased budget for product price reductions through promotions.

- Farmers: An additional payment of total €500.000 as a "premium for cooperation", recognizing their trust and their great personal effort to keep uninterruptedly supplying KriKri with milk.

- Employees: An additional average monthly salary is given to every employee, as an one-off bonus. The total cost of this initiative is €1.000.000.

For the rest of the financial year 2023, KriKri's Management estimates that the strong growth of its financial figures will continue. Thus, it updates the profitability estimates. Based on the Management's revised forecast for 2023, total sales are expected to exceed €200m, while Earnings Before Taxes and Interest (EBIT) are expected to reach €33m (+33% increase compared to the initial forecast of €24.8m).