Deoleo shareholders back the company’s management after a historically difficult year

• Deoleo held its General Shareholders Meeting today after a year marked by the biggest rise in the price of raw materials since records began, following two historically unfavourable campaigns.

• The Board of Directors and shareholders have accredited the effectiveness and consistency of the group’s strategy as well as the results achieved in a highly complex context.

• Ignacio Silva, Chairman and CEO of the Group, highlighted the soundness of the company’s roadmap and its key role in maintaining unit gross margin at the end of 2023.

• The Chairman and CEO also highlighted the positive business performance in the first quarter of 2024 and the favourable conditions for the next harvest 2024/2025.

Deoleo, world leader in the olive oil sector, today held its General Shareholders’ Meeting after a historically challenging year due to both the rise in the price of raw materials and discouraging harvest forecasts in terms of quality and quantity. Despite this, the company continued to make progress on its roadmap, slightly increasing sales and achieving an EBITDA of €30M by the end of 2023. 57,8% of Deoleo, S.A. shareholders were represented at the meeting.

Shareholders approved the individual and consolidated annual accounts, the management report and the statement of non-financial information (EINF) for the 2023 financial year. They also ratified the appointment by co-option and re-election of Mr Juan Arbide Estensoro as a proprietary director. In addition, shareholders gave the green light to maintaining the number of members of the Board members.

Resilience and strategic consistency in the face of a challenging environment

The Chairman and CEO of Deoleo, Ignacio Silva, gave an account of the complex context of both the agri-food and olive sector. He stressed that the sector has had to face the unprecedented circumstance of two consecutive bad harvests, both in terms of quality and quantity, leading to a drop in production.

In this environment, he said Deoleo has responded with agility and resilience. “The strength of Deoleo’s key brands, efficiency in commercial management and cost control have been central to defending and maintaining our unit gross margin through 2023,” he said.

Silva highlighted the maintenance of revenues, with a slight rise in sales, despite the challenges. He added that thanks to implementing adjustment measures and optimisation of operating expenses, the group achieved EBITDA of €30M. However, he noted that both the extraordinary increase in financial expenses and the accounting impact of asset impairments resulted in a negative net result of €34M.

Silva highlighted the strength of the company’s cash position, having repaid €20M of a tranche of senior debt in the first quarter of last year. The company also succeeded in reducing the requirements of the financial covenants. “These have been adapted to the new business circumstances, providing the flexibility required by the new situation, which allows us to meet them comfortably,” he said.

In addition, the top executive underlined the strength of the group’s strategy to navigate the complex context. He said that, leveraged on three key pillars (quality, innovation and sustainability), “it is the right tool to convey our commitment to our stakeholders and the olive oil industry”.

He particularly stressed the importance of promoting sustainability in all areas of the company. In this regard, he recalled the launch of the first Integrated Sustainability Report, which reflects the progress of the sustainability strategy. This is based on the purpose “We care for what cares for you” and marks the roadmap to be followed to consolidate Deoleo as a leader in sustainability within the sector. Since 2018, a total of 82 olive mills have been certified under the Sustainability Protocol for the production of extra virgin olive oil (EVOO), 15.5% more than in 2022. In addition, Silva highlighted the European Soil O-live project through which Deoleo transfers techniques to its suppliers to improve water and soil care. He also expressed his satisfaction at the fact that Ecovadis has been awarded the Platinum medal, placing it among the top 1% of companies in terms of ESG and business sustainability.

On sector transformation, he called for action. “The objective is clear: to cease being a sector marked by external factors and become an industry where the consumer is at the centre and knows and values olive oil as a fundamental element of the Mediterranean diet,” he explained.

Encouraging first quarter performance and vision for the future

Despite the challenging environment, Silva expressed an optimistic view of the company’s performance during the first quarter of the current financial year.

He highlighted the resilience of Deoleo’s brands, which have grown in market share at national level by 3.6 points, despite the 16.4% drop in consumption compared to the first quarter of the previous year. Sales also grew by 35% and volumes by 3%. The company’s ability to adapt in a constantly changing environment is also evident in EBITDA performance which grew 11% against the same period last year.

Regarding the 58.1 million euros of the senior tranche of long-term debt maturing in June 2025, Silva said that the company is already working to refinance it. This will be done sufficiently in advance to guarantee the development of the long-term business plan. In this regard, the company will evaluate an indicative offer it has already received, with the aim of closing the transaction in the coming months.

In conclusion, he said that, despite the encouraging results, the challenges still exist, so it is necessary to be cautious. At the same time, he insisted on looking to the future with a certain optimism, given that the weather and hydric conditions, at this stage of the year, are encouraging for the coming season. This will allow the company to continue to move forward with determination with the established roadmap. He thanked the shareholders for their support and trust, as well as the hard work of the Deoleo team to continue growing in a sustainable manner.