Bel : First-Half 2021 Financial report

Bel

French corporation (société anonyme) with a share capital of €10,308,502.50

Head Offices: 2 allée de Longchamp - 92 150 Suresnes

SIREN 542 088 067 - RCS Nanterre

FIRST-HALF2021 FINANCIAL REPORT

First-Half 2021 Business Report ..............................................................................................	1
Summary Interim Consolidated Financial Statements .............................................................	4
Statutory Auditor's Report on the Interim Consolidated Financial Statements ........................	25
Statement of the Company Officer Responsible for the Interim Financial Report ..................	27

Should there be any difference between the French and the English version of this Bel Group First-half 2021 Financial Report, only the text in French language shall be deemed authentic and considered as expressing the exact information published by Bel.

The Bel Group

The Bel Group is a world leader in branded cheese and a major global player in the healthy snacks segment. Its portfolio of differentiated and internationally recognized brands, including such products as The Laughing Cow®, Kiri®, Mini Babybel®, Leerdammer®, and Boursin®, as well as some 20 local brands, enabled the Group to generate sales of €3.5 billion in 2020. The acquisition of the MOM Group in 2016 complements a portfolio of strong brands with the integration of the Pom'Potes and GogosqueeZ brands. Almost 12,510 employees in nearly 40 subsidiaries around the world contribute to the Group's success. Bel products are prepared at more than 33 production sites and distributed in over 120 countries. www.groupe-bel.com

FIRST-HALF2021 BUSINESS REPORT

1. REVIEW OF OPERATIONS AND EARNINGS

(in millions of euros)		First-half 2021	First-half 2020	% Change
Sales	1 690,6	1 736,9	-2,7%
Operating income	108,6	175,0	-38,0%
Consolidated net profit - Group share		66,8	105,4	-36,6%

In the first half of 2021, Bel reported consolidated sales of €1,691 million, down 2.7% on a published basis, versus €1,737 million in the prior-year period. Unfavorable foreign exchange fluctuations negatively impacted sales by 3.9%, or €67.4 million, primarily due to the euro's rise against the U.S. dollar. Sales grew 0.7% organically for the period, after adjusting for hyperinflation in Iran1.

After an unfavorable comparison base significantly weighed down the sales performance in Q1 2021, with growth in the year-earlier quarter atypically boosted by pandemic-related panic buying, sales picked up in Q2 2021, despite weaker than expected sales during the Ramadan season. Q2 2021 sales

advanced 2.7% to €850 million, supported by particularly strong organic sales growth of 5.5% (1.2% after adjusting for the 2020 Covid impact), underscoring consumer trust in Bel's core brands. In particular, the growth trajectory of the Boursin® brand was confirmed in France, the United Kingdom and North America, where its spreadable version outperformed the market average. After a tough year marked by the Covid-19 pandemic, which penalized snack food brands, Mini Babybel® resumed growth notably in North America, and benefited from its successful "Join the Goodness" campaign and beefed-up promotional activity. Lastly, The Laughing Cow® once again reported very strong growth in the United States and Canada.

The sales breakdown by market segment is as follows:

			Second quarter				First half
(in millions of euros)	2021	2020	% Change	Organic growth**		2021	2020	% Change	Organic growth**
3 months	3 months		6 months	6 months
Global markets	686,7	687,5	-0,1%	2,4%		1 376,7	1 434,2	-4,0%	-0,8%
New territories*	163,7	140,6	16,4%	21,1%		313,9	302,7	3,7%	8,2%
Group total		850,4	828,1	2,7%	5,5%		1 690,6	1 736,9	-2,7%	0,7%

• New Territories encompass the business activities of MOM (Mont-Blanc, Materne), as well as markets in Sub-Saharan Africa and China.
• Including adjustments for hyperinflation in Iran and excluding AIF (All in Foods).

Global Markets

Sales remained buoyant in most European countries. In Germany, momentum was particularly strong as result of a favorable comparison base and the performance of Mini Babybel®, whose popularity among consumers was supported by promotions and in-store promotional campaigns. In France, steady sales growth was reported by all traditional brands until mid-May, when the ending of pandemic lockdown measures sparked a switch in consumer buying behavior toward non-food purchases. Volume

performances in the countries of the Middle East and North Africa region were more contrasted, as economic conditions eroded and lower than expected sales were reported during the usually robust Ramadan season. Algeria in particular suffered from significantly weakened economic conditions since the second half of 2020, leading to highly inflated prices for basic food products and adversely impacting consumer purchasing power. Countries in the Levant also reported deteriorated economic conditions and major local currency devaluations in Lebanon and Iraq. Particularly in

1 Organic growth corresponds to reported sales growth, excluding impacts from foreign exchange fluctuations and changes in

the scope of consolidation, i.e. on a constant structure and exchange rate basis, and excluding inflation in Iran. ∞Since 2020, Iran's economy is deemed to be a hyperinflation economy. Accordingly, inflation impacts, based on the Consumer Price Index (CPI), were excluded when determining organic growth.

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Bel - First half 2021

Lebanon the sharp decline of the Lebanese pound triggered high inflation which significantly impacted consumer offtake.

In North America, the underlying trend remained very positive. Core brands Mini Babybel®, The Laughing Cow® and Boursin® all reported excellent performances, while promotional efforts were sustained and advertising outlay was increased, confirming the relevance of Bel's strategy and its aims to accelerate growth in this geographical area.

New Territories

New Territories2 continued along a path of solid growth, once again driven by MOM's double-digit sales performance. Particularly strong momentum was reported in France and the United States as a result of beefed up promotional activity in all retail channels. China also reported sharply stepped-up growth.

Results

In the first half of 2021, consolidated operating income totaled €109 million, down 38.0% over the first half of 2020.

Operating income by segment is as follows:

(in millions of euros)

Global markets

New territories*

Group total

	2021	2020	% Change
	6 months	6 months
	64,2	122,2	-47,5%
	44,4	52,8	-15,8%
	108,6	175,0	-38,0%

• New Territories encompass the business activities of MOM (Mont- Blanc, Materne), as well as markets in Sub- Saharan Africa and China.

Operating margin fell 380 basis points during the period. The decline stemmed primarily from the published decrease in sales, higher raw material prices, high volatility of foreign currencies, and increased promotional spending in some markets. Productivity efforts implemented by Bel and savings on administrative and general overhead expenses nevertheless helped to limit the adverse impacts of those factors. The decline also includes expenses

arising from the project to dispose of the Royal Bel Leerdammer NL, Bel Italia and Bel Deutschland subsidiaries, the Leerdammer brand and all related rights, as well as the Bel Shostka Ukraine company.

After taking into account net financial result and income tax expense, consolidated net profit, Group share, totaled €67million, compared with €105 million at June 30, 2020.

2. FINANCIAL SITUATION

Bel's balance sheet remained healthy and strong at June 30, 2021, with net financial debt amounting to €718.8 million (including €101.3 million in right-of-use liabilities under IFRS 16), versus €584.1 million (including €111.1 million in right-of-use liabilities) at December 31, 2020. The increase resulted chiefly from the acquisition of an additional 17.56% interest

in MOM in April 2021 for €152 million, in accordance with the call option granted by MOM's minority shareholders in 2016. Following this transaction, Bel holds 82,5% of the ordinary shares of the MOM Group. At June 30, 2021, the Group's equity stood at €1,844.8 million, compared with €1,858.7 million at December 31, 2020.

2 New Territories encompass the business activities of MOM (Mont-Blanc, Materne), as well as markets in Sub-Saharan Africa and China.

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Bel - First half 2021

Bel continues to enjoy strong liquidity both in terms of cash and untapped credit lines. At June 30, 2021, Bel had €441 million in surplus cash and cash equivalents and €820 million in untapped credit lines maturing in 2023 and 2024.

3. OUTLOOK FOR 2021

In the second half of 2021, Bel expects to see a tough economic and financial environment, marked once again by currency volatility, unfavorable raw material prices and an unstable economic and geopolitical context in the Middle East and North Africa region. Further, because the evolving Covid-19 pandemic carries a number of uncertainties and clouds visibility for the months ahead, Bel reiterates its cautious stance going forward.

Against this backdrop, Bel nevertheless expects to benefit from the ongoing, underlying positive trend observed in key territories like the United States, Canada and China, as well as from MOM's very positive momentum. These growth drivers, which are expected to underpin the company's performance in the coming months, are perfectly in tune with the strategic choices made in recent years to strengthen Bel's leadership in the healthy snack market, while developing its product offering in the three complementary markets of dairy, fruit and plant- based foods. At the same time, Bel is renewing its

As a reminder, to optimize its financial structure and take advantage of favorable financing conditions, Bel successfully issued a $150-million US Private Placement (USPP) bond under French law to institutional investors in June 2020. The 15-year bond matures in November 2035.

commitment to help fight against climate change and to contribute to a new and positive food industry business model. In particular, the company reiterates its aim to achieve its carbon-cutting goals under Scope 1 and Scope 2 by the end of the year3.

After entering into a unilateral sales agreement on March 18, 2021, and obtaining a unanimously favorable opinion from labor representation bodies, Bel on July 13, 2021 signed an agreement to sell the Royal Bel Leerdammer NL, Bel Italia and Bel Deutschland subsidiaries, the Leerdammer brand and the Bel Shostka Ukraine company to Lactalis, in exchange for Lactalis' 23.16% interest in Bel (1,591,472 Bel shares). The transaction is in line with Bel's strategy to expand the company's activities beyond cheese products and strengthen its position as a major player in the healthy snack market. The transaction, which is subject to approval by the European Commission under merger control regulations, is expected to be completed by the end of Q3 2021.

4. MAIN RELATED-PARTYRELATIONSHIPS

Main related-party relationships are disclosed in note 8 of the summary consolidated financial statements for the half-year.

5. SIGNIFICANT SUBSEQUENT EVENTS

No significant subsequent event is to be reported.

3 Scope 1 covers direct factors of greenhouse gas emissions generated by an organization or a territory. Scope 2 covers indirect factors of greenhouse gas emissions associated with electricity and heat usage.

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Bel - First half 2021

SUMMARY INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated income statement at June 30, 2021, vs. prior year period	5
Consolidated comprehensive income statement	6
Consolidated balance sheet at June 30, 2021, vs. December 31, 2020	7
Consolidated statement of changes in equity	8
Consolidated cash flow statement	9
Notes to the consolidated financial statements	10

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Bel - First half 2021