Parmalat : The Board of Directors Approves the Semiannual Report at June 30, 2016

- NET REVENUE INCREASES AT CONSTANT EXCHANGE RATES AND SCOPE OF CONSOLIDATION AND EXCLUDING VENEZUELA (+2.3%): GROWTH IN THE LATIN AMERICA, AFRICA AND NORTH AMERICA SALES REGIONS

• EBITDA UP AT CONSTANT EXCHANGE RATES AND SCOPE OF CONSOLIDATION AND EXCLUDING VENEZUELA (+12%) THANKS TO IMPROVED RESULTS IN THE UNITED STATES OF AMERICA AND EUROPE

  • THE PROFIT FOR THE PERIOD GROWS AT CONSTANT EXCHANGE RATES AND SCOPE OF CONSOLIDATION AND EXCLUDING VENEZUELA (+59.3%) DUE TO IMPROVED RESULTS AT THE OPERATING LEVEL

• IN LATIN AMERICA, THE PROCESS OF NORMALIZING THE ACQUIRED ASSETS IS CONTINUING; HIGH LEVEL OF INFLATION AND MASSIVE DEVALUATION OF THE LOCAL CURRENCY IN VENEZUELA

  • IN AUSTRALIA, A REORGANIZATION OF THE INDUSTRIAL ACTIVITIES IS UNDER WAY SUBSEQUENT TO THE RECENT ACQUISITIONS

- THE 2016 GUIDANCE IS CONFIRMED

- LAG ACQUISITION: NO BASIS FOR ACTIVATING THE CONTRACTUAL GUARANTEES FOR PROSPECTIVE DATA

Milan, July 29, 2016 - The Board of Directors of Parmalat S.p.A., meeting today under the chairmanship of Gabriella Chersicla, reviewed and approved the Semiannual Financial Report at June 30, 2016, the highlights of which are reviewed below.

In the first half of 2016, the global economy was characterized by moderate growth and an uneven trend.

Another significant development in this period was the global surplus in the supply of raw milk, attributable in part to the elimination of milk quotas in the European Union, which resulted in relatively low purchase prices, albeit with significant regional differences.

More in detail, net revenue increased to 2,991.1 million euros, up 28.6 million euros (+1%) compared with 2,962.6 million euros in the first half of 2015. With data at constant exchange rates and scope of consolidation - obtained by excluding the results of the activities acquired in Brazil (Elebat), Mexico (Esmeralda Group) and Australia (Longwarry and the yogurt and dairy dessert operations) - and excluding the results of the Venezuelan subsidiary, the increase in net revenue is

59.4 million euros (+2.3%), with a positive contribution by the Latin America, Africa and North America sales regions.

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An overview of the Group's performance in its main sales regions is provided below.

The Europe sales region includes the subsidiaries that operate in Italy, Russia, Portugal and Romania. The region's net revenue totaled 532.1 million euros and EBITDA amounted to 54.8 million euros in the first half of 2016.

The significant devaluation of the ruble versus the euro had a negative impact on the sales region's net revenue and EBITDA amounting to about 8.3 million euros and 0.5 million euros, respectively.

With data at constant exchange rates, the region shows slightly lower net revenue and a 3.8% EBITDA increase compared the previous year.

In Italy - which accounts for about 90% both of the net revenue and EBITDA of the Europe sales region - consumption was down in the markets in which Parmalat operates. Despite this challenging environment, the local subsidiary retained the leadership of the milk sector, increasing its market share, thanks primarily to the performance of its Zymil brand. In the UHT cream category, Parmalat strengthened its first-place competitive position, thanks to an outstanding performance by its Chef brand.

The North America sales region includes the subsidiaries that operate in the United States and Canada. In the first six months of 2016, net revenue totaled 1,144.3 million euros and EBITDA amounted to 111.8 million euros.

The devaluation of the Canadian dollar versus the euro had a negative impact on the region's net revenue and EBITDA amounting to about 55 million euros and 4.5 million euros, respectively; on average, the U.S. dollar followed a steady trend during the two periods under comparison.

With data at constant exchange rates, net revenue and EBITDA show gains of 2.2% and 21.2%, respectively, compared with the previous year, thanks mainly to a positive performance by the U.S. subsidiary.

In the United States of America, the cheese market, considering the categories in which the local subsidiary operates, continued to show an attractive growth trend. In this context, Parmalat strengthened its market leader position in the chunk mozzarella, soft ripened cheese and ricotta segments and confirmed its competitive positions in the other categories in which it operates (fresh mozzarella, snack cheese, feta, gourmet cheddar cheese and gourmet spreadable cheese).

The profitability of the U.S. subsidiary improved sharply compared with 2015, thanks to the favorable terms for the procurement of raw milk and higher sales volumes. The EBITDA generated by LAG was the highest in percentage of the Parmalat Group. These positive results were also achieved thanks to the marketing strategy pursued in recent years and to further progress in the implementation of efficiency boosting programs in regard to operating costs and purchasing.

In Canada, Parmalat confirmed its second-place competitive position in the cheese segment, the category with the highest value added, reporting higher sales volumes than the previous year and held unchanged its market positions in the milk and yogurt categories.

The Latin America sales region includes the subsidiaries that operate in Brazil, Mexico, Venezuela, Colombia, Ecuador and Paraguay and smaller operations in other countries. The Group strengthened its presence in Brazil, with the acquisitions of LBR (January 2015) and Elebat (July 2015), as well as in Mexico, Uruguay and Argentina, with the acquisition of the Esmeralda Group in the second quarter of 2015.

In the first half of 2016, excluding effect of hyperinflation in Venezuela, the region's net revenue totaled 628.9 million euros and EBITDA amounted to 10.1 million euros.

With data at constant exchange rates and comparable scope of consolidation (excluding Elebat, Esmeralda and the contribution of the Venezuelan operations), net revenue and EBITDA show increases of 13.5% and 26.6%, respectively, compared with the first half of 2015.

In Brazil, the economic results for the first half of 2016 were positive overall, with expectations of a further improvement in the second half of the year, in a context characterized by an ongoing reorganization process aimed at normalizing all of the acquired activities and generate synergies and optimizations in production processes and the target markets.

In this context, Parmalat held unchanged its competitive position in the cheese and UHT milk categories, which represent the region's most important dairy markets.

In Mexico, where a rationalization of production facilities and the sales organization is being implemented, the results achieved in the first half of the year were positive, owing in part to favorable consumption trends in the cheese market, the primary market for the local subsidiary.

In Venezuela, in a context that is extremely critical both economically and politically, the local subsidiary reported sharply lower sales volumes compared with the previous year.

In the Africa sales region - which includes the subsidiaries that operate in South Africa, Zambia, Botswana, Swaziland and Mozambique - net revenue totaled 173.6 million euros and EBITDA amounted to 10.7 million euros in the first six months of 2016.

The devaluation versus the euros of all of the local currencies, the South African rand in particular, had a negative translation effect, reducing net revenue and EBITDA by about 54 million euros and

3.1 million euros, respectively.

With data at constant exchange rates, the region's results show an increase of 4.7% for net revenue and a decrease of 17.1% for EBITDA compared with the previous year.

In South Africa, the local subsidiary confirmed its position as the market leader in the flavored milk category, with its Steri Stumpie brand, and in the cheese segment, thanks to a positive performance by the Parmalat brand. As for UHT milk and yogurt, it confirmed its second-place competitive position in both segments.

In the Oceania region, net revenue amounted to 496.1 million euros and EBITDA totaled 10.9 million euros in the first half of 2016.

The devaluation of the Australian dollar versus the euro had a negative translation effect of about 31 million euros on net revenue and 0.8 million euros on EBITDA.

With data at constant exchange rates and scope of consolidation - excluding Longwarry, acquired in the first quarter of 2015, and the yogurt and dairy dessert operations, acquired through the Parmalat Australia YD subsidiary in the first quarter of 2016 - the increase in net revenue is 1.1% but EBITDA shows a reduction of 15.8% compared with the previous year.

It is also worth mentioning that in Australia a reorganization of the activities is under way; more specifically, the Group carried out a program of acquisitions with the aim of expanding its presence in its target markets, improving the procurement of production components and achieving greater efficiency and the rationalization of production facilities.

Parmalat is the leader in the pasteurized milk category and retained the second-place position in the flavored milk and UHT milk market, while strengthening its second-place competitive position in the yogurt market and consolidating its leadership position in the dessert market, thanks to the newly acquired activities.

The profit for the period amounted to 45.4 million euros, or 6.9 million euros more than the 38.5 million euros reported in the first half of 2015 (+17.9%).

This increase is mainly attributable to an improvement in operating results, a decrease in financial expense and a lower income tax expense.

With data at constant scope of consolidation and exchange rates and excluding Venezuelan subsidiaries, the increase in profit is 59.3% compared with the first half of 2015.

The net financial position amounted to 183.2 million euros, down 127.6 million euros compared with 310.8 million euros at December 31, 2015. The main reasons for this decrease include: the cash absorbed by operating activities for 52.1 million euros, mainly attributable to seasonal factors; the cash absorbed by non-recurring transactions for 40.6 million euros, mainly in connection with the acquisition of yogurt and dairy dessert activities in Australia and the payment to BRF S.A. of the price adjustment on the net financial position and working capital of Elebat Alimentos S.A.; the payment of dividends for 33 million euros, and a negative translation effect of 7.1 million euros. This decrease was offset in part by the cash generated by financing activities for 5.4 million euros.

The profit for the period decreased to 22 million euros, or 5.5 million euros less than the 27.5 million euros earned in the first half of 2015. This reduction was mainly determined by a decrease in net financial income (1 million euros less than in the same period last year) and lower dividends and income from investee companies (5.7 million euros, compared with 11.3 million euros in the first half of 2015), offset in part by an improvement at the EBIT level.

The net financial position went from 136.8 million euros at December 31, 2015 to 102.4 million euros at June 30, 2016, for a reduction of 34.4 million euros, due mainly to the payment of the 2015 dividend.

Cash and cash equivalents and other financial assets are invested in sight deposits and short-term instruments with counterparties belonging to top banking groups.

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During the first six months of 2016, the dairy market was characterized by a low cost for raw milk, due mainly to a supply and demand imbalance. Indications of a trend reversal, with raw milk prices starting to rise, began to appear in June in some areas.

In this context, the Group continues to focus on a carefully targeted pricing policy in order to respond to this change in scenario.

For the recently acquired businesses in Latin America and Australia, which are faced with specific challenges in the markets in which they operate, their priority will be on implementing reorganization processes aimed at achieving their full integration, aligning their quality standards with those of the Group and attaining the desired results.