Apetit Oyj : CEO’s review Q3/2022

Esa Mäki, CEO

"Both businesses showed a profit in the third quarter. However, the increase in costs, which has influenced the operations from beginning of the year, still impaired the Q3 result, which was slightly lower than in the comparison period. In Oilseed Products, the result improved from the comparison period. The result for the review period was improved by the transfer some of the higher costs to sales prices. The fact that raw material prices levelled off supported profit performance, but profitability is still impaired by high costs, such as energy and logistics costs.

In Food Solutions, both net sales and sales volumes grew in the third quarter especially in the food service sector. In retail trade, sales volumes and net sales remained on a par with the comparison period's high level. In exports, sales did not reach the comparison period level. A significant factor in the decrease in net sales of exports is the postponement of pea deliveries. In Food Solutions, the effects of the cost inflation have already been transferred to prices, but the price changes will mainly enter into force at the beginning of October. In particular, high energy costs, which had increased from the comparison period, had a negative impact on the result.

This harvest season has been successful for Finnish vegetables. The Finnish frozen pea harvest was good in terms of both quantity and quality and also in line with the targets set. The root vegetable harvest season has gone well, too. For instance, the harvest of carrots grown under carrot netting is qualitatively and quantitatively good. We continued our domestic vegetable research and development activities with making the cultivation technique more efficient for chickpeas and cauliflower, among other things. During the research period, chickpeas were collected with pea harvesters for the second time. Based on the lessons learned from the previous harvest season, some changes were made to harvesting, which resulted in positive experiences.

Apetit is a stable buyer for domestic rapeseed. We will continue our efforts to increase the cultivation area and harvest size of domestic oilseed plants in Finland. With the higher price level, oilseed plants, well suited to crop rotation, are now an attractive option to farmers also in terms of profitability. According to the September harvest estimate of Natural Resources Institute Finland, the rapeseed harvest in Finland would increase by more than 35 per cent from last year. This increase was definitely needed after the modest oilseed plant harvest in the last year. Nevertheless, the harvest volume is still clearly below the average harvests over the last ten years. Domestic rapeseed oil is valued and in high demand in all sales channels: industry, professional kitchens and retail. The innovative BlackGrain rapeseed ingredient, which is currently in small-scale production, responds to the future global need to increase the availability of plant-based proteins. In our development efforts we have made development in moving the production to an industrial scale.

In its corporate responsibility programme, Apetit has committed to reducing its direct emissions by 75 per cent by 2025. The most significant emission reductions are achieved from energy solutions: the introduction of electricity generated with wind power and the Kantvik bioenergy plant, which was commissioned last year. At the Säkylä plant, the goal is to commission the energy solution based on heat recovery and gas produced with bioenergy during the second quarter of 2023. Work on the plot of the Säkylä frozen foods plant have already started, with the aim of having us closer to our ambitious emission reduction target already next year, as scheduled. The new energy solution will reduce the Säkylä plant's CO2 emissions by up to 80 per cent.

Our significant investment in the Pudasjärvi frozen pizza plant is completed. At the turn of September-October, frozen pizzas baked with sourdough have arrived in shops from our renewed frozen pizza plant. The delicious frozen pizzas, made in Finland mainly with domestic raw materials, have been welcomed warmly by consumers. With these new high-quality pizzas, we will grow our market share in the significant frozen pizza product category.

Our efforts to promote a sustainable food supply chain and improve profitability continues."

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Avena Nordic Grain Oy is now Apetit Kasviöljy Oy

The sale of Apetit Group's Grain Trade business to Berner Oy took place on May 31, 2022. Avena Nordic Grain was responsible for Apetit Group's Grain Trade and Oilseed Products businesses. As part of the sale, the right to use the Avena name was also transferred to Berner. Avena Nordic Grain Oy new name is Apetit Kasviöljy Oy and its subsidiary Avena Kantvik Oy is now named Apetit Kantvik Oy. The companies form the Apetit Group's Oilseed Products business. The new names have been already registered in the trade register. Both companies' business ID numbers, invoicing information and phone numbers will remain unchanged. The business has already introduced changes to the e-mail addresses of the personnel of the companies, which now have the format

. We continue to purchase domestic oilseeds and develop cultivation together with our partners. We will also import certain amounts of rapeseeds in addition to domestic procurement. This way we can offer our customers decent quantity of high-quality oil products and feeds for their success.

CEO's review Q1/2022

Esa Mäki, CEO: "The significant increase in the prices of production inputs had a negative effect on the profit performance of continuing operations in the first quarter. The profitability of Food Solutions was reduced in particular by higher energy costs. The profitability of Oilseed Products was weighed down by the high costs of raw materials and logistics. Both businesses will continue to transfer the higher costs to sales prices. At the end of December, we announced that Apetit had signed an agreement to sell the Baltic operations of the Grain Trade business to Scandagra Group. The sale concerned the business operations of Avena's companies in Estonia and Lithuania. The transactions for both companies were completed as planned in March. In connection with these divestments, we decided to close our Latvian company. The Latvian company primarily provided logistics support for wheat and oilseed plants sourced in Lithuania. In March, we announced the sale of the Finnish operations of the Grain Trade business to Berner Ltd. The transaction will be carried out as a business transfer including Avena's Finnish grain trade business, as well as its grain stocks and port operations in Finland. The transaction is expected to be completed in the second quarter. The completion of the sale is subject to approval by the competition authority. Once completed, the divestment of the Grain Trade business will improve Apetit's profitability and allow Apetit to focus on the growth and development of its processing businesses, namely the Food Solutions and Oilseed Products businesses. The operating environment and competitive landscape in the Grain Trade business has changed drastically during the past few years. The operating conditions have continuously become increasingly challenging for a company that operates purely as a grain seller. In the upcoming cultivation season, our target for contract growing is the previously established level of just over 30 million kilograms of domestic vegetables. In addition to contract farming, we will continue to implement a number of projects at our experimental farm to seek ways to improve soil fertility and water economy, for example, and to develop the cultivation of various legumes, such as chickpeas, to correspond to the needs of the industry. This will present us with the opportunity to further increase our degree of domestic origin and our self-sufficiency with regard to specialty plants. We will continue our efforts to increase the cultivation area and harvest size of oilseed plants in Finland. Due to the significant increase in the prices of oilseed plants, the profitability of cultivation is at an attractive level from the farmer's perspective, and there is certain demand for oilseed plant raw material in the Finnish food industry. Highquality rapeseed oil is valued and in high demand in all sales channels: industry, professional kitchens and retail. The BlackGrain rapeseed ingredient, which is currently in small-scale production, responds to the need to increase the availability of plant-based proteins. Our development efforts are focused on moving the production to an industrial scale. Apetit's corporate responsibility programme sets a target of reducing the CO2 emissions from Apetit's own operations by 75 per cent by 2025. The most significant emission reductions are achieved from the bioenergy plant completed at the Kantvik vegetable oil milling plant, which became operational last year, and the new energy solution to be deployed in Säkylä. The energy solution at the Säkylä frozen foods plant will use heat-capturing technology and renewable energy to reduce the plant's CO2 emissions by as much as 80 per cent. The new energy solution is scheduled to be deployed in the second quarter of 2023. To date, we have reduced the Group's emissions by over 50 per cent compared to the baseline year specified in our corporate responsibility programme. Phasing out the use of fossil fuels and having a fixed price for electricity will also significantly reduce the Group's energy costs in the next few years. In general, Apetit has successfully achieved its goal of ensuring the health and safety of employees and undisrupted operations throughout the food supply chain during the COVID-19 pandemic. However, sicknessrelated absences caused by the pandemic have significantly increased during the early part of the year. Apetit will continue to promote sustainable food supply chains in a profitable manner."

CEO's review Q4/2021

Esa Mäki, CEO: "Apetit Group's net sales in the fourth quarter were at the same level with the comparison period but profitability declined. Towards the end of the year, profitability was weakened especially by the rise in energy costs and the increase in the price of oilseed plant raw materials that had continued since the summer. At the annual level, our operating profit was lower than in the previous year due to the weak profitability of the Grain Trade business. The profitability of the Oilseed Products segment was burdened by the record-high raw material price and increased logistics costs. With regard to the refining margin, the situation will remain challenging early in the year. In Food Solutions, development has been, for the most part, very positive. The retail demand for food remained strong until the end of the year. Demand in the Food Service channel also continued to recover. In food exports, we strengthened our position especially in the Swedish retail sector with new customer relationships. Although the pea harvest fell significantly short of the target, which reduced export volumes towards the end of the year, the total annual value of exports increased by 5 per cent. Profitability improved in all sales channels. Our delivery reliability has also remained at an excellent level. In the Oilseed Products business, we continued our systematic work to commercialise the new rapeseed-based plant protein during the year. The small-scale production of the BlackGrain from Yellow Fields plant protein started in October 2021. The small-scale production enables customers to test BlackGrain in their own product development. At Apetit, BlackGrain was used for the first time in a commercial product in early 2022 as Apetit Vegetable Ball was launched for the HoReCa market. The Kantvik bioenergy plant was commissioned towards the end of the year. The plant significantly reduces the Group's CO2 emissions and energy costs. In the bioenergy plant, we can also make full use of production side streams, such as the straw that comes with seeds. The side streams account for about 10 per cent of the total fuel amount. The total value of the investment was approximately EUR 7 million. We have succeeded in improving production efficiency throughout the Kantvik vegetable oil milling plant: records were achieved both in rapeseed milling and in oil refining. Increasing the cultivation of domestic oilseed plants in line with our goal supports our efforts to improve the profitability of the Oilseed Products segment in the new harvest season. In December, Apetit Group's subsidiary Avena Nordic Grain agreed on selling the Baltic operations of the Grain Trade business to Scandagra Group, which is a leading agriculture company in the Baltic countries. This business transaction is in line with our strategy and will make the Grain Trade business significantly healthier. The transaction is expected to be completed during the first quarter of the year. The changing COVID-19 situation has required us to act flexibly and competently in implementing various exceptional arrangements. Regardless of this all, we have successfully achieved our goal of ensuring the health and safety of our employees and ensuring undisrupted operations throughout the food supply chain. For this, I would like to thank our personnel warmly. In the corporate responsibility programme published in spring 2021, Apetit set targets for every stage of the value chain. An important goal is to reduce the climate impacts of our own operations. In this area, we have identified the impacts of energy consumption as essential. Significant investments in both Kantvik and Säkylä in the use of renewable energy and the development of energy and material efficiency reduce our climate impacts considerably. Put together, they will propel us towards our goal of reducing our own direct CO2 emissions by 75 per cent by 2025."