Ter Beke : Résultats annuels 2022

PRESS RELEASE

Regulated information

BE- Lievegem, 24 February 2023 - 07:30

2022 Consolidated Annual Results

Ter Beke is able to limit the impact of cost increases despite high inflation

thanks to tight cost control and active cooperation with customers.

Ter Beke group looks to the future with confidence.

***

1. 12% consolidated sales growth (from EUR 697 to 781 million).

1. Transparent pass-through of cost increases but with limited impact on consumers thanks to tight cost control and active cooperation with customers.

1. New multi-year strategic action plan for sustainable growth launched.

1. The proposed acquisition of Imperial-Stegeman is still pending approval by the Belgian and Dutch competition authorities.

Headlines and key figures Ter Beke Group

Despite difficult market conditions with high inflation putting pressure on purchasing power and the occasional supply chain challenges due to raw material unavailability, the group managed to increase consolidated turnover by 12% from EUR 697 to 781 million. The transparent pass-through of cost increases, in addition to continuous cost control, was a crucial factor for this result, especially in the second half of 2022.

CEO Piet Sanders reacts to the 2022 results: 'The total cost increases approached a figure equal to double our 2021 EBITDA. The challenge was tremendous. The fact that we still managed to achieve around 5% underlying EBITDA on sales is a real achievement by the entire Ter Beke team which sought to create win- win partnerships with our stakeholders.'

The underlying EBITDA results show a gradual recovery in Ready Meals financials in the second half of the year 2022. This was achieved thanks to a responsible pass-through of cost increases by improving operational performance. Underlying results in the Savoury segment (previously Processed Meats segment) were slightly down in the second half, mainly due to the impact of high inflation and slightly declining demand for Savoury products.

Non-underlying costs (EUR 2.3 million in total for 2022) in the current financial year consist entirely of expenses incurred in connection with the proposed acquisition of Imperial-Stegeman. This acquisition is still pending approval by the Belgian and Dutch competition authorities. In the previous financial year the non- underlying costs (EUR 6.9 million) were significantly higher and included costs linked to the proposed acquisition as well as costs related to the sale of the captive reinsurance company in Luxembourg and the change in CEO.

Net financial debts were further reduced by EUR 6 million from EUR 73.8 million to EUR 67.8 million.

PRESS RELEASE

Regulated information

Impact of inflation - war in Ukraine - energy crisis

As expected, inflation had a great impact on our results, both in the first but even more so in the second half of 2022. The cost of animal proteins rose due to soaring feed and energy prices and because of avian flu and upticks in African swine flu. These increases affected beef, pork and poultry as well as derived products such as milk, cheese, etc. Packaging prices also rose sharply due to higher energy costs, among others. The main ingredients of our ready meals also experienced sharp price increases and the availability of ingredients was complicated by the impact of the war in Ukraine, rising energy prices and persistent drought or difficult weather conditions in large parts of Europe. Tomatoes for example remain scarce, and durum wheat (used in the production of our own pasta) became significantly more expensive and while the cost of most other ingredients also increased dramatically. Ter Beke continues to work on a sustainable pass- through of these cost increases along the chain. At the same time, it is also working on optimizations to minimize cost increases for consumers.

To make the timely pass-through of inflation/deflation of costs transparent, most new contracts were concluded for a limited time period only or included an automatic indexation of the cost of key raw materials.

The war in Ukraine has almost no direct impact on Ter Beke as our direct purchases and sales from / to Ukraine and Russia were very limited. The group immediately halted ongoing plans to expand sales to Russia at the start of the war. Indirectly, however, it did have implications - mainly because of urging energy prices and inflation of our ingredients, packaging and other costs. In terms of energy, the impact was somewhat limited thanks to a number of hedges that were executed earlier. However, the upward trend in costs was and still is very apparent.

Strategic Business Unit Savoury (Previously 'Division Processed Meats)

Business unit turnover increased by 5% from EUR 422.9 million to EUR 442.5 million, mainly due to the responsible (but delayed) pass-through of cost increases. Volumes in the business unit decreased, mainly due to the drop in consumption and the non-renewal of a number of contracts. The total pass-through of cost increases was, as already indicated, delayed after the first half of the year.

With respect to the new strategic plan, which aims to broaden the product portfolio, the segment was re- branded 'Savoury'. This name better reflects of the broader range of products in which the group wishes to continue to invest. This product portfolio also includes hybrid, vegetarian and plant-based products, which will gradually increase in importance within the category over time.

The combination of the delayed pass-through of cost increases and the additional operational efforts to continue serving customers in very difficult market circumstances as well as the loss of volume caused a 27% decline in the segment's underlying EBITDA result, from EUR 28.9 million in 2021 to EUR 21.0 million in 2022.

The proposed acquisition of Imperial-Stegeman (pending approval) should enable the Strategic Business Unit to market branded products alongside its private label products portfolio. In addition, The sale of vegetarian, hybrid (meat and vegetables) and plant-based products, as well as the sale of snacking products in the Benelux and beyond should accelerate following the acquisition. It would also benefit innovation in the entire category.

Strategic Business Unit Ready Meals

Revenue within the Ready Meals SBU increased by 24% from EUR 274.09 million to EUR 338.9 million, mainly due to the -albeit delayed- pass-through of cost increases and the further recovery of the foodservice business post-pandemic. Our new products for the UK market also performed well, fueling the recovery. Volumes held up well in retail and shop price inflation did not cause a decline in consumption to date. Our product portfolio provides nutritional products for every budget. The impact of temporary supply issues on customers was very limited and logistics teams performed solidly in what were very challenging external market conditions.

PRESS RELEASE

Regulated information

The high inflation and the delayed pass-through of cost increases triggered a decrease in underlying EBITDA of the segment by 22%, from EUR 28.4 million to EUR 22.0 million in 2022.

The group continued to invest in new products and extensions of existing product ranges. The roll-out of the Come a Casa brand in Eastern Europe is also on track, partly thanks to the earlier expansion at our facility in Opole, Poland. Also in the Ready Meals SBU, the new strategy will ensure a further product range extension including vegetarian and plant-based dishes, continuing to build on earlier successful launches by the group in the UK.

Proposed Dividend

The Board of Directors will propose to the General Shareholders Meeting to maintain the gross dividend per share for 2022 at EUR 4.00 in the form of a scrip dividend.

Post balance sheet events

None

Outlook 2023

New strategy:

The group has already begun implementing the new multi-year strategic plan to achieve sustainable growth in the future in addition to high quality, 'giving total peace of mind' to its customers This strategy will also focus on innovations in existing and new products. The investment in start-up Davai, which produces tasty vegetable dumplings, is part of this strategy, alongside other strategic pillars such as the creation of a group R&D team, the focus on operational excellence, as well as the focus on brands, digitization and process harmonization.

The first benefits of this new group strategy are expected in 2023,although in 2022 a number of major steps were already taken to make products and processes more sustainable. Under the guidance of the sustainability manager, efforts were made to build a dual materiality matrix and KPIs and targets were set that are monitored through a sustainability platform. 'Ambassadors' were also appointed at all sites and numerous ESG activities (Environmental, Social and Governance) and initiatives were launched. We calculated the group's Corporate Carbon Footprint and the detailed Carbon Footprint of the core products - in order to respond even better to the demands of our customers and consumers and to contribute to more sustainable food production together with our vendors.

Savoury Products:

As a result of a number of contracts that could not be renewed, Ter Beke expects volumes in Savoury products to decline slightly in 2023. At the operational level, the group will adapt to these new circumstances and actively continue to seek additional volumes to ensure further growth and corresponding coverage of overheads. The group will also continue to invest in supply chain optimizations to work with our customers and offer consumers a high-quality and affordable product as well as in innovations that can offer consumers a more nutritional and sustainable choice. Barring unexpected circumstances, the group expects the segment's U-EBITDA to land somewhere between the 2021 U-EBITDA and that of 2022.

Ready Meals:

The group expects segment results for Ready Meals to improve significantly as contract extensions reflect the increased input costs and were also either limited in time to reflect any additional inflation or included an automatic indexation mechanism for key ingredients. With its high level of automation, Ter Beke is now also reaping the benefits of its investments of recent years. Barring unforeseen circumstances, the group expects the segment's U-EBITDA to gradually catch up with the 2021 U-EBITDA.

PRESS RELEASE

Regulated information

Corporate:

The group expects an increase in corporate costs due to the roll-out of the new strategy, including an increased focus on sustainability, R&D, digitization and further professionalization of human resources. These costs are believed to contribute to future results as indicated above.

General:

Providing an outlook in times of uncertainty on commodity availability and inflation is always a difficult task. The general scarcity of specific raw materials, ingredients, and packaging materials may in some cases lead to supply issues due to force majeure. With overall shorter contract periods, additional or lost sales volumes may impact the group's results more quickly than in the past.

PRESS RELEASE

Regulated information

Consolidated results 2022

1. UEBITDA: EBITDA from current operating activities
2. EBITDA: result from operating activities + depreciation + amortization + movements in provisions
3. Net financial debts: interest-bearing debts - interest-bearing receivables, cash and cash equivalents
4. Gearing ratio: Net financial debt/Equity
5. Ratio always based on the average weighted number of shares in the financial year.
6. The net cash flow consists of the result of the financial year excluding the contribution in the changes in equity plus (minus) non-cash expenses (revenues).