FRONERI PROVIDES ITS MID-YEAR UPDATE FOR THE SIX MONTHS ENDED 30 JUNE 2022

Sales growth above prior year while EBITDAE¹ margin trails in a challenging economic environment. US in a market-leading position, as the transformation and integration continues

Highlights

Financial performance

• Sales and EBITDAE in the six months ended 30 June 2022 are higher than prior year, A-Brand² sales driving growth
• Gross profit margin % and EBITDAE margin % down. Challenging economic environment with inflationary cost pressures continuing to be experienced across raw materials and energy and labour shortages across key markets
• Marketing and media investment increased to support A-Brand growth and new product launches, including Mondelēz in the US and Nuii in Eastern Europe
• Froneri Group branded market share is up +1.1% compared to prior year with share growth in most markets
• Private Label performing strongly with consumers looking for a lower price point during periods of economic pressure
• Integration of the US business is progressing with significant investment in the factories, product innovation, and marketing investment delivering good sales and market share gains

Operational performance

• New product launches in 2022 – including Mondelēz in the US and Puerto Rico; Nuii in Eastern Europe; and Extrême Cookie Cone in Europe - have been well received by customers
• Capex projects in the six months ended 30 June 2022 focussed on factory improvements and increased capacity in the US to drive sales growth and investment in Freezers to support the re-opening of the OOH³ market across the world

Performance review
Froneri’s sales performance in the six months ended 30 June 2022 has delivered growth compared to prior year, benefitting from increased US sales, continued recovery of the OOH market post-COVID and impact of unavoidable sales price increases.

The US ice cream market has grown more than 4% in value terms driven by snacking, super premium, and pricing. Froneri has secured a strong share of the market, with growth of 1.2% YTD due to investment in production, marketing and quality, and, the strength of the A-Brands portfolio (including the launch of Mondelēz).

The OOH channel has benefitted in 2022 from the re-opening of sales outlets following continued lockdowns in the first half of 2021, particularly in the US, Germany, Spain and Switzerland. However, tourism has not yet returned to pre-COVID-19 levels and some OOH sales outlets are not expected to survive the pandemic. We have therefore sought to secure new customers and to increase our offering to existing customers to offset this.

Cost inflation of raw materials and packaging, energy and distribution has been pervasive across all markets in the first half of 2022 and is expected to continue into the second half and 2023. We have secured price increases and continued to drive operational efficiencies to mitigate this impact. We have maintained pallet volumes in line with prior year, but gross margin percentage is down compared to prior year due to a timing delay between the cost increases impacting and the sales price increases taking effect.

The transition of the US onto Froneri systems is underway and is on-track to be completed in H2 2022.

Notes for editors:
Froneri is a fast-growth international business with a vision to build the world’s best ice cream company. A passionate challenger brand, we are building the market through a focus on ice cream, delivering value for retailers and consumers. Created in 2016 as a joint-venture between PAI Partners and Nestlé, we have since acquired a number of businesses, the most recent being the acquisition of Dreyer’s (Nestlé’s US ice cream business). We are now the second largest manufacturer of ice cream and the number one private label producer worldwide. We are present in 23 countries with annual revenue of over €4billion and over 12,000 employees worldwide. For more information visit: www.froneri.com

1. EBITDAE is a non-GAAP measure. EBITDAE is EBITDA before exceptional items
2. A-Brands sales represents sales of our strategic ice cream brands (including Häagen-Dazs, Extrême, Maxibon, Cadburys brands and Oreo)
3. Out-of-home (OOH) refers to sales of single ice creams that are consumed outside of the home. Retail refers to sales of mainly take-home ice cream products (sold to retailers) which are consumed at home