21/11/2017: Greenyard announces H1 results 2017-2018

Sint-Katelijne-Waver, Belgium, November 21, 2017 - Greenyard (Euronext Brussels: GREEN) announced its HY results ending September 30, 2017

• Sales are down 2.4% YoY to € 2,094.5m. Excluding the currency effect (-0.4%), sales declined internally by 2.0% compared to strong base last year of +6.8%

  • Fresh reports a sales decline of 2.5%. Internally, top line dropped by 2.2% versus a high comparable base and a stable price evolution after strong price inflation last year

  • Long Fresh' sales were down 2.6% but currencies explain 1.2% of the drop. Sales declined by 1.4% internally, which implies a strong Q2 (+1.4%). Long Fresh was confronted with shortages, while ongoing price and product mix improvements continued to contribute to top line growth

  • Horticulture sales were up 4.5%, mainly thanks to internal growth (+3.0%)

• REBITDA declined by 5.5% to € 73.4m. This entails a € 4.3m drop driven by:

  • Fresh dropped by € 2.6m largely driven by price pressure on bananas, combined with challenging sourcing and lower volumes YoY

  • Long Fresh' was slightly down (€ -1.1m). The continuing efforts to improve portfolio management and ongoing progression in Frozen France were curbed by the impact of shortages, ongoing price pressure in Prepared and irregular supply caused by adverse weather conditions

  • Horticulture declined by € 0.5m due to tough harvest conditions during summer and higher transportation costs

• Net result came in at € 11.7m. Excluding the non-cash impact of the fair value adjustment on the convertible bond, net result arrives at € 12.5m, up 84% YoY

• Including the impact of the share buyback, adjusted EPS increased to € 0.29, up more than 90% YoY

• A significant step-up in CAPEX spent to € 35.2m driven by growth investments in Fresh and timing effect

• Net financial debt dropped by € 32.5m YoY to € 346.5m. This translates into a leverage of 2.4x, down from 2.7x last year. This was realised despite the strong rise in investments and our share buyback programme

• The corporate tax rate showed a structural decline towards 37.3%, down from 47.2% last year

• Closing the acquisition of Mykogen following approval of all competent authorities. Mykogen adds 8% to group REBITDA with consolidation as from December 1, 2017

'We are pleased with the good improvement of the net result of our company further benefitting from the refinancing and ongoing tax savings. At the same time, our net debt continued to decline despite high investments in the growth of our business.

Nevertheless, both in Fresh and Long Fresh, adverse weather conditions hindered our operations and hence financial performance. In Long Fresh, price pressure in Prepared is still ongoing as well.

Going forward, we remain determined to keep our focus on profitable growth, and therefore accelerated a number of initiatives to improve profitability. Actions taken include rightsizing of our Fresh operations in Poland, Germany, Belgium and the UK. These actions lead to more streamlined operations in these countries and lower overhead costs. These initiatives are combined with investments in new state-of-the-art operations that ensure that Greenyard stays at the forefront of our sector.

To conclude, we remain confident Greenyard has the right strategy and priorities in place to generate profitable growth and further strengthen our position as a global leader of fruit & vegetables in all its forms.'

(in € million) H1 16/17 H1 17/18 YoY

Sales 1,751.0 1,707.3 -2.5%

REBITDA 45.5 42.9 -5.8%

REBITDA margin 2.6% 2.5%

Sales of Fresh declined by 2.5%. With a small FX impact of -0.3%, growth dropped internally by 2.2%. Growth was realised in the Netherlands, Poland and the Growth Markets. However, this was more than offset by declines in both German Market and Belgium.

Whereas last year's top line was helped by price increases, H1 of this year was marked by less inflationary effects. This could not be compensated by ongoing product mix improvements driven by exotics, Ready-To-Eat and mixes. Moreover, availability issues impacted top line as well.

REBITDA dropped by 5.8% translating into a margin of 2.5% (-9bps YoY). There are two key reasons for this drop. Firstly, price pressure on bananas. Secondly, operational efficiencies were impacted by challenging sourcing over the period combined with the drop in volumes.

(in € million) H1 16/17 H1 17/18 YoY

Sales 358.8 349.4 -2.6%

REBITDA 26.8 25.7 -4.0%

REBITDA margin 7.5% 7.4%

Long Fresh witnessed a sales decline of 2.6%. Foreign currencies impacted sales negatively by 1.2%, driven by the GBP. As such, internal sales evolution showed a -1.4% decline. This is an improvement compared to the -4.0% in Q1, entailing a solid performance in Q2 (+1.4%). This progress was mainly driven by the ongoing price and product mix improvements in Frozen, which largely curbed the impact of shortages due to last year's harvest. Prepared's top line was still impacted by shortages as well as ongoing price pressure. Also the mushroom activities within Prepared are not yet performing as anticipated both in terms of top line and margins.

REBITDA declined by 4.0%, only slightly ahead of the sales drop resulting in stable margins YoY. Underlying improvements stemmed from an ongoing trade-up in the portfolio mix and further enhancement in Moréac (Frozen France). This was more than offset by operational inefficiencies due to lower processing volumes and irregular supply resulting from adverse weather conditions.

(in € million) H1 16/17 H1 17/18 YoY

Sales 36.3 37.9 4.5%

REBITDA 5.4 4.9 -10.1%

REBITDA margin 15.0% 12.9%

Sales are up by 4.5% in H1. Internal growth amounted to 3.0% as growth in Q2 continued at the 3% level, as was the case in Q1. The acquisition of Nesterovskoye contributed 0.9% to top line whereas the impact of currencies was minimal (+0.6%).

The vast majority of internal growth is driven by strong demand for winter products in Q2, mainly in Western Europe, after a decent start in Q1 as well. Poland is weaker due to bad spring weather. The integration of Nesterovskoye is proceeding according to plan, significantly increasing Horticulture's sourcing hereby securing future growth.

REBITDA dropped by 10.1% representing a margin drop to 12.9%. The decline is mainly driven by a temporary deterioration of the product mix as well as tough harvest conditions in the summer period. Additionally, transportation costs increased after the exceptionally low levels reached last year. This could not be curbed by ongoing tight cost control efforts.

Non-recurring items amounted to € -3.2m compared with € -5.9m last year. Restructurings & write-offs of € 2.2m mainly relate to general restructuring and reorganisation costs in a number of operations. Costs related to mergers & acquisitions are almost entirely related to the Mykogen transaction.