Massimo Zanetti Beverage S p A : MZBG - The Board of Directors approves the nine months 2020 Results

PRESS RELEASE

MASSIMO ZANETTI BEVERAGE GROUP SPA: THE BOARD OF DIRECTORS APPROVES THE

NINE MONTHS 2020 RESULTS

MASSIMO ZANETTI, THE GROUP'S CHAIRMAN AND CHIEF EXECUTIVE OFFICER, SAID: "The results for the first nine

months of 2020 have been considerably affected by the global measures aimed at containing the spread of Covid-19. In particular, most markets with a strong presence in the Food Service channel suffered an abrupt slowdown beginning in March and subsequently recorded gradual improvements despite the still complex global scenario. Forecasts on the evolution of the public health crisis, whose impact and size remain to be defined, are uncertain, especially in the light of the recent increase in contagion, which has already led to new selective closures in several markets. Meanwhile, we are implementing all the initiatives necessary to preserve the Group's solidity and carrying out cost containment actions in all geographical areas".

• VOLUMES STABLE COMPARED TO THE FIRST NINE MONTHS 2019 (-6.1% ON A COMPARABLE BASIS*)
• REVENUES: EURO 610.6 MILLION COMPARED TO EURO 666.9 MILLION OF FIRST NINE MONTHS 2019; -8.4% AT CURRENT EXCHANGE RATES, -7.6% AT CONSTANT EXCHANGE RATES, -9.7% ON A COMPARABLE BASIS
• GROSS PROFIT: EURO 256.7 MILLION COMPARED TO EURO 300.0 MILLION OF THE FIRST NINE MONTHS 2019 WITH THE MARGIN ON REVENUES OF 42.0% COMPARED TO 45.0% OF THE FIRST NINE MONTHS 2019
• EBITDA ADJUSTED: EURO 28.3 MILLION, COMPARED TO EURO 58.2 MILLION OF THE FIRST NINE MONTHS 2019
• NET RESULTS: EURO -20,5 MILLION, COMPARED TO EURO EURO 8,1 OF THE FIRST NINE MONTHS 2019
• NET DEBT: EURO 299.3 MILLION COMPARED TO EURO 266.5 MILLION AT DECEMBER 31, 2019.

Villorba, November 9, 2020. The Board of Directors of Massimo Zanetti Beverage Group S.p.A., one of the leading brands worldwide in the production, processing and marketing of roasted coffee, listed on the Milan Stock Exchange (MZB.MI), approved today the first nine months of 2020 results.

1. comparable basis: at constant forex and LFL (like-for-like, at the same perimeter, excluding acquisitions of Café Pacaembu completed in October 2019 and Bean Alliance Group, completed at the end of January 2019)

VOLUMES

The first nine months of the year has been characterized by the progressive reduction in volumes in the Food Service channel, impacted by the measures adopted by governments worldwide to combat the spread of the virus Covid-19, with the full closure of all non-core activities, in most of the country around the world for several weeks.

As the restrictions were gradually eased, the Group saw a recovery that was increasingly robust despite the continuing complex contest.

In the first nine months of 2020, the roasted coffee sales volumes of Massimo Zanetti Beverage Group ("Group" or "MZB Group") were equal to 94.0 thousand tons, stable compared with the first nine months 2019, -6.1% on a comparable basis.

At the geographical level, the Americas recorded 6.7% growth on the first nine months of 2019, driven by the positive performance Mass Market and Food Service; on a comparable basis, volumes declined slightly, by 3.8%. Northern Europe recorded an increase in volumes of 0.6% on the first nine months of 2019 due to the positive performance of the Mass Market channel, which offset the decline recorded in the Food Service channel. Southern Europe, with a decline in volumes of 15.1% compared to the first nine months of 2019, was particularly impacted by the weak performance of the Food Service and Private Label channels. The Asia-Pacific and Cafés area was down by 19.0% (-22.0% on a comparable basis) compared to the first nine months of 2019, due to the Food Service and Private Label channels, partially offset by the growth of the Mass Market channel.

CONSOLIDATED REVENUES

The Group's consolidated revenues amounted to Euro 610.6 million showing a decrease of Euro 56.3 million (-8.4% at current exchange rates, -7.6% at constant exchange rates) compared to the first nine months of 2019. This decline is mainly due to the decrease of roasted coffee sales price (-6.7%) impacted by (i) the measures adopted by governments worldwide to limit the Covid-19 pandemic which heavily penalised the mix in products and sales channels, and by (ii) the decrease of the cost of raw material (green coffee).

Revenues on a comparable basis (at constant forex and with the same perimeter) decreased 9.7% compared to the first nine months of 2019.

REVENUES BY CHANNEL

The revenues from the Food Service channel were down 32.4% at constant FX (-33.5% on a comparable basis) compared with the first nine months of 2019 as a result of the complete closure of all non-essential activities in all countries to limit the spread of Covid-19.

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Mass Market increased 9.4% at constant FX (+7.1% on a comparable basis) compared with the first nine months of 2019 and showed positive performance of all countries.

The Private Label revenues decreased 6.1% at constant FX (-8.8% on a comparable basis).

	First nine months ended September 30,
(in Thousand of Euro)	2020		2019
Foodservice	106,909	17.5%	160,335	24.0%
Mass Market	256,670	42.0%	236,849	35.5%
Private Label	207,556	34.0%	222,677	33.4%
Other	39,420	6.5%	47,006	7.1%
Total	610,555	100.0%	666,867	100.0%

Change

Current FX	Constant FX
-33.3%	-32.4%
8.4%	9.4%
-6.8%	-6.1%
-16.1%	-15.4%
-8.4%	-7.6%

REVENUES BY REGION

Revenue in the Americas, at Euro 295.1 million in the first nine months of 2020, was up 2.6% at constant exchange rates (-1.9% on a comparable basis) compared with the first nine months of 2019, attributable to a positive performance of the Mass Market channel.

Revenue generated in Northern Europe, decreased 6.5% at constant exchange rates compared to the first nine months of 2019, showing a decrease of sales of the Food Service channel partially offset by a solid growth of the Mass Market channel.

Revenue in Southern Europe decreased 21.8% compared to the first nine months of 2019 due to the negative performance of the Food Service channel.

Revenues from Asia Pacific, which also include those from the international network of cafés, amount to Euro 58.2 million, a decrease of 18.8% on a comparable basis, due to the decline of the Food Service channel, partially offset by the growth of Mass Market channel.

	First nine months ended September 30,
(in Thousand of Euro)	2020		2019
Americas	295,088	48.3%	292,119	43.8%
Northern Europe	125,458	20.6%	134,749	20.2%
Southern Europe	131,776	21.6%	168,470	25.3%
Asia-Pacific and Cafés	58,233	9.5%	71,529	10.7%
Total	610,555	100.0%	666,867	100.0%

Change

Current FX	Constant FX
1.0%	2.6%
-6.9%	-6.5%
-21.8%	-21.8%
-18.6%	-17.5%
-8.4%	-7.6%

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GROSS PROFIT

Gross Profit at Euro 256.7 million in the first first nine months of 2020 shows a decrease of Euro 43.3 million compared with the first nine months of 2019 (-14.4%). This is mainly explained by the decline of Gross Profit resulting from the sales of roasted coffee and by the impact of the exchange rates (-0.8%).

The trend in Gross Profit from the sale of roasted coffee is mainly due to the effect of the aforementioned pandemic on the mix sold in 2020, in addition to the trends in sales and purchase prices respectively of roasted and green coffee (-13.2%).

In percent of revenues the Gross Profit is 42.0% compared with 45.0% of the first nine months of 2019.

EBITDA ADJUSTED

EBITDA adjusted amounts to Euro 28.3 million in the first nine months 2020, compared with Euro 58.2 million of the first nine months 2019. In addition to the factors commented on at the level of gross profit, this change was influenced by the positive impact of exchange rate fluctuations of Euro 2.1 million and by the decrease in operating costs of Euro 11.2 million. This decrease refers to the reduction of service costs (mainly travelling expenses, agent fees and maintenance) and payroll costs partially compensated by the increase of bad debt provision and other operative costs.

Adjusted EBITDA excludes non-recurring costs incurred, amounting to Euro 4.6 million primarily related to:

• efficiency projects in America
• the resolution of a litigation with an American client;
• as well as the accrual to the bad debt provision made exceptionally to take into account the likely impacts of potential credit loss due to the Covid-19 pandemic.

OPERATING INCOME (EBIT)

Operating income (EBIT) is equal to Euro -12.4 million, a decrease of Euro 34.3 million compared to the first nine months of 2019. In addition to that disclosed about EBITDA, the decrease is attributable to the increase in amortization and depreciation, for Euro 2.1 million.

NET RESULT

Net result is equal to Euro -20.5 million in the first nine months 2020, a decrease of Euro 28.6 million compared to the first nine months of 2019. This performance, in addition to what was previously described for the operating profit, is also due to the combined effect of:

• the decrease in the shares of losses of companies accounted for using the equity method, amounting to Euro 0.6 million;
• the increase in net finance costs for Euro 0.3 million;
• the decrease in income taxes for Euro 5.4 million, mainly due to lower profit before taxes compared with the same period of 2019.

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