Deoleo ends year in positive territory despite a complicated environment, demonstrating its sound strategy

• The company recorded Ebitda of €43M and net profit of €6M, despite operating in an inflationary context marked by the relentless rise in the price of raw materials and falling consumption.

• Efficient management of the mix of countries where the group operates, as well as the strength of its brands and solid commercial practice, enabled the company to increase sales by 18% and maintain good performance in volumes.

• Deoleo’s brands consolidated their leadership in key markets such as Spain and the United States, where their market shares in the year grew by 1 and 0.9 percentage points, respectively.

• The group remains committed to leading sustainable development in the sector, allocating 36% of its investments to sustainability initiatives.

Deoleo, the world’s number one olive oil company, has once again demonstrated the soundness of its business strategy by recording a positive net result for 2022 despite the difficult environment. The group obtained a net profit of €6M and Ebitda of €43M thanks to the resilience and strength of its brands, as well as its continued commitment to quality, innovation and sustainability.

The year was marked by the relentless rise in the price of olive oil at source, which accelerated in the second half of the year to more than 66% and led to a generalised fall in consumption in the category. This impact was compounded by rising energy prices caused by the war in Ukraine, tensions in the supply chain, inflation and rising interest rates.

However, thanks to efficient management of the mix of countries where the group operates, as well as the leading position of its brands and solid commercial strategy, sales rose 18% to over €827m at the end of the year. Deoleo succeeded in gradually and partially passing on higher costs to sales prices and in maintaining good performance in volumes which, in such a complex scenario, only fell by 5%.

Likewise, good commercial management in the different regions, combined with favourable exchange rate movements, enabled the company to slightly improve gross margin and increase unit gross margin by 6% compared to the previous year.

Despite the challenging environment, Deoleo has continued to invest in its main brands, Carbonell, Koipe and Maestros de Hojiblanca in Spain and Bertolli, the leading brand in the United States. As a result, consumer confidence has strengthened, driving a positive trend in market shares throughout the year. They grew by 1 percentage point in Spain and 0.9 percentage points in the United States. The brands thus consolidated their strength and improvement in markets that account for a large part of the Group’s business volume and which also play a key role in the sector’s growth. Over the last three years, Deoleo’s brands have accumulated growth of 1.6 and 4.6 percentage points in Spain and the United States, respectively.

Ignacio Silva, chairman and CEO of Deoleo, said: “This year we have had to operate in a very complex global environment. In addition to high levels of inflation arising from the supply crisis and tensions in the energy market, we have had to continue to deal with continually rising raw materials prices and the effect this has had on consumption. Despite this, our market share has continued to grow in key countries for the group such as Spain and the United States and we have achieved positive results for the third consecutive year, demonstrating the strength and resilience of our strategy and, more importantly, maintaining consumer confidence in our brands, while driving sustainable development in the sector”.

As a result of Deoleo’s successful management, the company closed 2022 with positive results for the third consecutive year. Ebitda came to €43M, down 11% on the previous year due to continuing promotional investment and commercial costs. Net profit amounted to €6M, compared to €16M on a like-for-like basis in the previous year. This result does not take into account the positive effect of a tax reassessment of brands registered in Italy.

Successful sustainability strategy: the key to a challenging environment

The company’s roadmap set out in its 2022-26 strategic plan, focused on sustainability as a main pillar and a consumer focus, has given the group resilience for a challenging context. The commitments acquired in its 2030 agenda mark the path to follow to consolidate Deoleo as a leader in sustainability within the olive oil sector. The group’s sustainability strategy embodies the approach that Deoleo has maintained over the years: “Caring for what cares for you” and is based on three pillars (Growing together, Blends made with love and Caring for you) that represent Deoleo’s concern for farmers, people and the planet in general.

In 2022, the group earmarked 36% of its investments to projects linked to sustainability, with which it seeks to guide sustainable development of the sector.

As a result of these initiatives, the group is a pioneer in olive oil and olive grove research and the only company in the sector involved in the SOIL O-LIVE programme, financed by the European Union. This programme studies the effect of agricultural management on the general state of soil health in Mediterranean olive groves. It is part of the group’s sustainability strategy and its Sustainability Protocol, through which 69 olive mills in Spain, Portugal and Italy, covering more than 270,000 hectares of olive groves, have already been certified. Likewise, 44% of the olive oil purchased by the group between 2021 and October 2022 came from mills certified as sustainable.

In addition, the company has invested in solar panels at the Alcolea plant, so that 20% of its energy comes from renewable energy and a 44% reduction in direct emissions has been achieved. At the same time, following improvements to cooling towers, water consumption has been reduced by 24%. In terms of equality, the group’s wage gap is non-existent. All this has meant that Deoleo has been awarded the gold medal by the EcoVadis certifier for the third consecutive year.

Strengthening financial soundness

During the year Deoleo continued to strengthen its finances. Net financial debt at year-end stood at €101m, a 15% reduction over the previous year. This was possible thanks to management of working capital and the effect of the new contractual conditions of factoring lines.

Looking ahead, 2023 is expected to remain a challenging year, but the company has the necessary tools to cope. It is expected that the 2022/2023 harvest will fall 23% worldwide, 34% in Europe and 48% in Spain, based on current data.

By mutual agreement with its financial creditors, in view of the volatility and uncertainty of the olive oil market situation at source, the group has modified certain conditions of its long-term loan to make it more flexible in its terms and conditions.