Page 18 - PARMALAT 2017 ANNUAL REPORT

Revenue and Profitability

NOTE: The data are stated in millions of euros and local currency. The amounts shown for changes and percentages could reflect apparent disparities
caused exclusively by the rounding of figures.

At the global level, 2017 brought a consolidation of the growth trend, supported by expansive monetary and fiscal
policies. The uncertainty that characterized certain developments was tied more to issues of a political nature than to
strictly macroeconomic considerations, specifically related to the new U.S. administration.

Among the main countries in which the Group operates, Brazil reported a return of growth, albeit modest, which
signaled a trend reversal after two years of recession at a rate of more than 3%. The reduction of the rate of inflation
and lower interest rates are factors that provided steady support for internal demand throughout the year. On the
other hand, the situation remains critical in Venezuela, where all macroeconomic indicators continue to be decidedly
negative.

In a development highly significant for the Group, the first half of the year saw a trend reversal compared with 2016
with regard to the cost of raw milk, as the supply excess experienced last year mitigated, mainly due to the
elimination of the milk quota system in the European Union, while purchases by China provided support for milk
prices on the international markets. At the consolidated level, this trend gradually diminished in the second half of the
year, due primarily to a surplus of raw milk in areas that are net exporters of milk, mainly Europe, North America and
Oceania.

On the currency front, the foreign exchange effect on the Group’s results was basically neutral. More specifically, the
strengthening of the euro versus the U.S. dollar the second half of the year eroded most of the positive effect
recorded in the first six months .

Parmalat Group

The table below shows the highlights of the Group’s results in 2017 and a comparison with the previous year:

Year
(amounts in millions of euros) 2017 2016 Variance Varian.%
Net Revenue 6,695.5 6,489.4 206.1 +3.2%
EBITDA 453.6 458.5 -4.9 -1.1%
EBITDA % 6.8 7.1 -0.3 ppt

Net revenue totaled 6,695.5 million euros, for a gain of 3.2% compared with the previous year, and EBITDA decreased
to 453.6 million euros, or 1.1% less than the 458.5 million euros reported in 2016.
Compared with the previous year, the consolidation of the Venezuelan subsidiary, at current exchange rates and
including the effect of hyperinflation, had a negative impact on the Group’s revenue of 20.2 million euros, while the
effect on EBITDA was positive by 10.5 million euros.

For a better understanding of the Group’s performance compared with the previous year, some analyses, in addition
to using constant exchange rates and scope of consolidation, exclude the results of the Venezuela subsidiary, given
the uncertainty that characterizes the situation in that country, the massive devaluation of the local currency and an
extremely high level of inflation.

16 Report on Operations – Revenue and Profitability