Greenyard announces clear improvement in profitability and accelerated decrease of leverage

Sint-Katelijne-Waver, Belgium, 17 November 2020

1. Highlights

  • A clear improvement in sales (10,3%) and adjusted EBITDA (18,9%) has been achieved in the first half of the 2020/2021 financial year. The company is returning to a positive net result and on track to meet its adjusted EBITDA outlook (€106m to €110m).
  • Continuing closer integration with customers has led to this growth proving to be stable even in uncertain economic times. Greenyard, and the industry in which it operates, have shown resilience and the ability to respond with agility in a fast-changing environment. Adjusted EBITDA margin has grown to 2,6% mainly, but not exclusively, through higher efficiency and investing in added value services.
  • Net financial debt and leverage clearly continued to decline during the first six months of the financial year. The leverage ratio dropped below 4,0x six months earlier than anticipated, down from 7,2x in the previous year. Reducing nominal debt and leverage remain focal points for Greenyard. Based on current information and forecasts, Greenyard estimates that the leverage ratio will be around 3,7x by the end of the 2020/2021 financial year, be close to 3,0x by the end of the subsequent financial year (2021/2022) and evolve permanently below 3,0x thereafter. This confirms earlier outlooks on leverage ratio.
  • These improved financial results will contribute positively to a successful refinancing. Greenyard's syndicated loan facility and convertible bond both mature in December 2021, and the company aims to refinance its debt before the end of the current financial year. Greenyard is looking into a refinancing in which bank debt remains a key component.
  • Greenyard is investing in sustainability and its social context. In doing so, Greenyard has formulated four commitments around climate action, water stewardship, responsible sourcing and achieving zero waste, with the clear ambition of playing a leading role in the sector. To this end, a group sustainability director will be appointed. The company believes that greater effort and investment in sustainability go hand in hand with adding economic value.
  • Interested parties are invited to a live webcast today. This can be accessed by visiting thefollowing linkor via telephone: +32 2 588 50 96, Passcode: 44019026#. The call begins promptly at 2:00pm (CET). An audio replay of the conference call will be made available later on Greenyard's investor relations webpage.

Hein Deprez, co-CEO:"Greenyard is demonstrating that its strategy of long term, sustainable and stable relationships in the value chain of both segments, works. This strategy ensures balance and certainty across the entire value chain. It reinforces the trust placed in growing together with the customer, even in uncertain times. For growers too, we will accelerate our investment, with the

REGULATED INFORMATION - 17 November 2020 - 7.45am

2 / 14

same level of intensity and integration, in professional, innovative and integrative collaborations, ultimately leading to a further shortening of the supply chain. At group level, we are therefore taking the next steps in group sourcing."

Marc Zwaaneveld, co-CEO: "Our objective to deepen our close collaboration in the value chain with customers and growers demonstrates our clear determination to add value to improve the entire supply chain in terms of availability, quality and cost. It forces us to adapt our organisation every day, making it better, more efficient and more sustainable, growing with every step. It is already leading to a significant shift towards more stable and higher volumes and margins, partly through more added value services, but also through structural process transformation, for example in sourcing and transport. Above all, we are accelerating our sustainability ambitions, with four concrete commitments. By striving for sustainable and continuous improvements in an integrated value chain, we lay the foundation for strong and stable growth over the next years."

2. Key financials - continuing progress

Sales. Greenyard continues to achieve positive sales growth. Group sales increased year-on-year by €203,7m, up from €1.968,9m to €2.172,6 m (10,3%). Of the 10,3% increase, 11,1% is organic growth, slightly negatively impacted by 0,6% FX headwinds, and 0,2% representing divestments in the last financial year.

  • Fresh. An 11,1% increase in sales amounting to €179,6m, up from €1.612,6m to €1.792,2m, resulted mainly from better vegetable sales, combined with continued strengthening and growth in integrated customer relationships. To a lesser extent, it was also driven by higher volumes arising from the COVID-19 quarantine measures starting in mid-March 2020, which caused a shift from out-of-home to at-home consumption in the first quarter of the financial year.
  • Long Fresh. Sales have increased by €24,1 m (6,8%) in the first half of the financial year, up from €356,3m to €380,4m. Despite the temporary drop in sales to food service customers, when out-of-home consumption ground to a halt in the second quarter of the calendar year, particularly affecting the Frozen division. The Long Fresh segment continues its steady growth. The sales dip in the food service segment has been offset by increased sales to retail customers.

Graph 1: Sales

1.968,9

2.172,6

380,4

356,3

1.612,6

1.792,2

Long Fresh

Fresh

H1 19/20

H1 20/21

REGULATED INFORMATION - 17 November 2020 - 7.45am

3 / 14

Adjusted EBITDA. As a result of transformation initiatives and growth in sales, particularly arising from integrated customer relationships, the adjusted EBITDA (before application of IFRS 16) increases significantly by 18,9%, up from €47,6m to €56,6m. Consequently, the adjusted EBITDA margin increased from 2,4% in the same period last year to 2,6% for the first six months of the financial year.

Adding the impact of IFRS 16 to the adjusted EBITDA, this would amount to €76,9 m, up 16,5% from the €66,0m for the first six months of the previous financial year.

  • Fresh. The adjusted EBITDA for the Fresh segment increased by €7,8 m over the same period last year, from €24,6m to €32,4m, representing a considerable increase of +31,5%, resulting in a margin improvement of 28bps. Focusing on stable margin improvement and efficiency through Greenyard's transformation initiatives has had positive results. In this way, margins have not been materially impacted by the additional costs associated with the COVID-19 pandemic. Since around two-thirds of sales in the Fresh segment are already earned through stable and long-term integrated customer relationships, the adjusted EBITDA margin is becoming increasingly robust and volatility is being eliminated.
  • Long Fresh. The adjusted EBITDA for the Long Fresh segment increased by 2,5%, up from €24,3 m to €24,9 m, mainly driven by a better product/price mix. Nevertheless, the margin declined slightly by 27bps due to costs associated with COVID-19 and lower than expected agricultural yields over the summer, though yields gradually recovered from September onwards.

Graph 2: adjusted EBITDA

24,6

24,3

47,6

66,0

32,4

24,9

56,6

76,9

H1 19/20

H1 20/21

Fresh

Long Fresh

Adjusted EBITDA (before IFRS 16)

Adjusted EBITDA (Plus IFRS 16)

Graph 3: Margin evolution

6,8%

6,5%

2,4%

2,6%

1,5%

1,8%

H1 19/20

H1 20/21

Fresh

Long Fresh

Adjusted EBITDA margin (before IFRS 16)

REGULATED INFORMATION - 17 November 2020 - 7.45am

4 / 14

EBIT. EBIT amounts to a positive €27,1 m, indicating a recovery of €42,1 m compared with a negative -€15,0 m in EBIT in the same period of last year, driven by the improvement in adjusted EBITDA and the absence of impairments for the first six months of the financial year, versus €29,5m of impairments last year.

Net result. Greenyard returns to a positive net result of €1,1m for the first half of the financial year, compared to a loss of -€44,9 m for the same period in the previous financial year. In addition to a higher EBIT, interest expenses for the first six months have also been € 4,8m lower than in the same period last year.

Leverage. Compared to the end of September 2019, the financial debt (before application of IFRS

  1. was reduced by €95,6m from €503,0m to €407,4m. Since the end of the last financial year, Greenyard has reduced its net financial debt by €18,2 m. Consequently, at the end of September 2020, the leverage ratio (before application of IFRS 16) amounted to 3,9x almost half the 7,2x a year earlier. Based on current information and forecasts, Greenyard estimates that the leverage ratio will be around 3,7x by the end of the 2020/2021 financial year, be close to 3,0x by the end of the subsequent financial year (2021/2022) and evolve permanently below 3,0x thereafter. This confirms earlier outlooks on leverage ratio.

The leverage ratio is 4,5x, after the IFRS 16 impact of €240,6 m on the net financial debt, down from a leverage ratio including IFRS 16 impact at the end of the preceding financial year of 4,9x. Greenyard leases most of the warehouses in its Fresh segment to keep maximum flexibility to its customers, achieving an asset-light business model.

The decrease in nominal debt is the result of the good operational performance and further optimisation of working capital, as well as a lower CAPEX paid due to unintended delays towards the second half of the year, directly linked to the COVID-19 measures. The lower leverage ratio will result in a lower interest rate charged to Greenyard in the coming financial period.

Graph 4: Net Financial Debt and Leverage Evolution

700,0

8,0x

660,1

650,0

7,2x

648,0

7,0x

600,0

6,0x

550,0

5,0x

4,9x

500,0

503,0

4,5x

4,4x

4,0x

450,0

3,9x

425,6

400,0

407,4

3,0x

H1 19/20

FY 19/20

H1 20/21

Net Financial Debt (before IFRS 16)

Net Financial Debt (IFRS 16)

Leverage (before IFRS 16)

Leverage (IFRS 16)

REGULATED INFORMATION - 17 November 2020 - 7.45am

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

Disclaimer

Greenyard NV published this content on 17 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 November 2020 06:54:01 UTC