Royal FrieslandCampina (RFC) Investor Presentation summary

Financial performance and margin expansion

• EBIT for H1 2024 reached €362m, a significant increase from €47m in H1 2023, driven by gross profit recovery and cost savings of €152m in cost price and SG&A.

• Net profit rose to €183m, up €175m year-over-year, with free cash flow improving to €49m from -€27m.

• Gross margin improved to 16.8% from 11.3% in H1 2023, reflecting the absence of negative effects from 2023 and successful cost control.

• Leverage ratio decreased to 0.9 and interest coverage ratio increased to 6.0, indicating stronger financial health.

• Net revenue declined by 6.7% to €6,433m, mainly due to lower milk prices and currency effects.

Business group performance

• Europe faced revenue and EBIT pressure from private label competition and price cuts, but saw market share gains for key brands.

• Retail & Americas improved EBIT due to absence of expensive stocks, despite lower net revenue from milk price declines.

• MEPA achieved higher volumes and EBIT growth despite currency headwinds, with import restrictions lifted in Egypt and support for dairy in Nigeria.

• Asia saw EBIT growth from cost savings and positive volume mix, offsetting slight revenue decline from currency and competition.

• Ingredients experienced volume growth at strategic customers but lower EBIT due to joint venture performance.

• Specialised Nutrition delivered higher revenue and EBIT, led by strong growth in China and Hong Kong.

• Professional & Trading increased profitability in strategic categories, though trading volumes decreased.

Operational efficiency and cost savings

• Achieved €152m in cost savings, including €59m from negotiations and market developments, helping offset inflation.

• Productivity improved at over 30 production sites, with a unified supply chain and support functions driving efficiency.

• SG&A costs reduced from €463m to €432m, aided by lower personnel costs and currency translation.

• Decrease of 1,146 contracted employees since December 2023 contributed to cost reductions.