Co-Ro Holding A/S

Letter from the CEO2022 marked CO-RO’s 80thanniversary. Throughout theyear, our great employees andpartners celebrated our long andproud heritage of refreshing anddelighting consumers around theglobe.Operationally, our business momentumcontinued throughout the year. Weexecuted our “Balanced Growth”strategy, delivered solid sales growth,and strengthened our organization andmarket positions.2022 in summary•Double digit revenue growth(+12,3%) driven by good performancein our core Middle East and Africaregion and growth in Asia.•Record sales of our biggest brand,Sunquick, and market share growth ofSuntop in the Middle East markets.•Best ever results on employeesatisfaction, innovation sales andefficiency savings.•Step-up on our ESG agenda, includingmapping of global CO2 emissions.•Positive, but lower Ebit margin (downby 1.6%pp) due to increase in inputcosts, higher investments in innovationand in our new business in Egypt.•Significantloss on financial itemsdue to negative return on securitiesand currency devaluation in severalmarkets.Coping with inflation and fluctuationsin financial marketsLike most other companies, we facedsteep rises in input and utility costs,especially in Europe after the pointlesswar in Ukraine. Our great employeesand partners acted fast to increase salesprices and implement cost efficiency ini-tiatives. However, the impact comes withsome delay and although we managedto reduce the gap between cost inflationand price increases during Q3 and Q4, itwas not enough to fully offset the costincreases within 2022.Our large portfolio of securities (blue-chipbonds and shares) provides CO-RO withstrong financial independency, but thedownturn in the global financial marketsin 2022 unfortunately led to a significantloss on securities. In addition, several ofour subsidiaries in developing marketswere in 2022 impacted by currency de-valuations. In combination, the impactfrom securities and devaluations resultedin losses on financial items of 126 mDKK.Despite the negative financial result,I am proud of how our dedicated andhard-working organization has copedwith the challenges and ensured ourbusiness, people and brands are in goodshape for the years to come.2023 – positive momentum, butcontinued high volatilityWe are entering 2023 with strongin-market momentum. We expectgood sales growth in all 3 regions,mainly driven by price increases andnew innovations. However, the volatileenvironment will continue to impact ourbusiness and operations.With this in mind, we updated our“Balanced Growth” strategy for 2023/24,with increased focus on winning incore markets, building 1-2 new scalemarkets, and accelerating our initiativeswithin sugar reduction, efficiencies, andsustainability.In 2023 we look forward to goinglive with our brand-new factory inBangladesh and launching Sunquick inthis high growth market. In Denmark, wewill initiate the exciting process of build-ing a new, best-in-class and CO2 neutralcompound factory.Reminiscing on CO-RO’s 80-year longhistory, I would like to extend a warmthank you to our employees, customers,and our valued partners for their relent-less efforts to overcome the many macrochallenges and help deliver continuedbusiness growth.Søren Holm JensenPresident & CEOManagement review

DEVELOPMENT IN FINANCIAL YEAR2022As 2022 unfolded, it became clear thatit would become a year anything butnormal. The terrible situation in Ukrainehave touched all of us, with its personaltragedies and devastating consequences.Ripple effects can be felt throughout theglobe, and we have seen energy- andraw materials prices soaring through theroof whilst supply chains continued tobe disrupted all over the world. On topof that, Covid have continued to play itsrole in many of our Asian markets.The ever-strong commitment from ouremployees and partners around theworld coupled with the impact of theabove-mentioned elements, have ledto a financial result in 2022 where ourstrong brands and products have secureda 12.3% increase in revenue (in reportedcurrencies) or 1,915 mDKK.Production cost rose significantly com-pared to last year as a consequenceof high prices on commodities andunexpected high inflation. Distributioncost and Administration cost were equal-ly impacted by high inflation, high freightcost etc., but with our strong efficiencyagenda and strong cost control we man-aged to secure a spending in percentageof revenue slightly lower than last year.The time gap between the rising inputcost and increases in sales prices led toa decline in EBITDA of 22.9 mDKK thusending at 151.1 mDKK.We continued to invest in capabilities,systems and machinery, albeit at aslightly more prudent level than last year.Earnings before Interest and Tax (EBIT)amounted to 11.3 mDKK for the full year.Net Financials showed a significantincrease in expenses, leading to -126.4mDKK in 2022 against last year’s in-come of 17.4 mDKK. CO-RO have overthe years accumulated significant freecash flow, which is kept in the companyboosting our solvency rate and providinga solid platform for future investments.The funds are invested through assetmanagement mandates in blue-chipbanks. Unfortunately, 2022 was a terribleyear for the financial markets, henceleading to a very poor return on oursecurities of -94.9 mDKK. In addition,our global footprint in fragile marketsexposes CO-RO to currency fluctuations.In 2022 we saw significant devaluationof several of our trading currencies, theEgyptian Pound and Sri Lankan Rupee inparticular. The operational result com-bined with the poor financial items led anet profit for 2022 of -111.4 mDKK.We are proud of the strong progress inmost markets with market-share gains insuch volatile times, leading to a revenuein line with expectations, as well as thegood progress in projects and initiatives,but the dire circumstances and delay inpassing on the high input prices, lead toan EBIT for 2022 which was below man-agement’s expectations.Balance sheet, Investments & CashFlowsCO-RO Group total assets at 31December 2022 amounted to 2,663mDKK against 2,803 mDKK at 31December 2021.Investments were slightly lower thanlast year as management decided totake a more prudent approach given thevolatile circumstances. We finished ourproduction facility in Bangladesh andestablished Ready-To-Drink productioncapabilities in Malaysia, while at thesame time continuing to invest in generalmaintenance and improvements in allour plants. All investments made in 2022were funded internally.Trade Working Capital declined slightly innominal terms despite the increased ac-tivity and ended at 500 mDKK or 26.1%of revenue (down 3.4 %-points from lastyear). The high commodity prices as wellas mitigating actions taken to avoid out-of-stock situations from disrupted supplychains have increased our inventory in2022, but tighter cash-managementcontrols have let to lower receivablesoffsetting the increase.Consolidated net cash flows ended at-170 mDKK in 2022 compared to -66mDKK in 2021. Cash flows from operat-ing activities decreased by 36.3 mDKKmainly from the lower profit as a resultof the high input cost. Investments wereslightly lower level than last year, butthe loss on securities from the collapseon the financial markets, led to the verypoor net cash flow for the full year.Group solvency rate remains high at68.3% vs 68.4% last year.