Deoleo : Press release H1 2017

Deoleo reduces its losses by 75% in the first half of the year to 5 million euros

• In the second quarter, the result was positive for 2.6 million euros, reflecting good business performance.
• The main business units showed positive evolution in comparison to the previous year, despite the fact that the price of oil at origin continues to rise.

Madrid, July 28, 2017.- Deoleo reduced its losses by 75% in the first half of the year to 5 million euros compared to the negative result of 19.8 million for the same period last year.

The net result for the second quarter of the year was positive for 2.6 million euros, which reflects the good performance of the company, even more so within the current context of olive oil prices. Extra virgin rose 25% year-on-year and 12% in the first half of 2017. Even so, price volatility has had less impact as a result of the company's new policies, focused on margins and not volume, improved management of oil purchases, as well as greater efficiency and expense optimization.

Revenues increased by 1.5% to € 344.2 million during H1 2017, but EBITDA dropped to

€ 20.4 million, reflecting raw material price evolution and certain one-time restructuring expenses incurred.

Even so, profitability has increased in all business units, with the exception of Northern Europe. Southern Europe has grown in sales, and substantially in profitability (+ 31%), despite the complicated market environment, as a consequence of focusing on sales with margin. In Spain customers have been recovered and in Italy the seed oil business has contributed to growth.

North America has gained profitability (+ 10%) due to increased activity in the United States food channels; in the club channel (with lower margin), Deoleo has agreements for its gradual recovery in the coming months.

The International Markets unit has significantly increased its EBITDA (+ 20%), having grown more than 40% in 2016, due to good performance in India, where a new distribution model is being successfully implemented; And also by good evolution of the business in the Middle East.

Financially, Deoleo has cash levels ensuring sufficient liquidity and allowing for the expansion of the company's supplier base, as a result of the available revolving and factoring lines. In addition, Deoleo has complied with all financial covenants as of June 30, 2017. Net financial debt rose slightly in the first half of the year, 3.8%, due to the need to stock high quality oils.

Conclusions

Deoleo's business strategy, a long-term project focused on value and quality, requires structural changes as have been carried out in recent months.

As such the company is completing the global repositioning of its leading brands, which, together with the industrial reconfiguration of the group, opens the way to a new customer-oriented and quality-oriented Deoleo. In fact, this new strategy focused on quality is already paying off: Deoleo brands have received recognition from industry and consumers with 29 international awards received in the current year in some of the most prestigious olive oil conventions around the world.

On the other hand, the adjustments made and the new methodology of continuous improvement, based on the Kaizen philosophy, which is being implemented throughout the organization, will favor efficiency and help boost innovation, and will have a positive effect on results in the next quarters.

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