Greenyard is installing a “transformation team” to instigate a turnaround plan after reporting disappointing third-quarter results and revising its full-year profit outlook.
The Belgium-based vegetable supplier said its performance tailed off in December after a pick-up in the previous two months amid a “competitive retail landscape”, particularly in its domestic market and in Germany. The Brussels-listed firm added sales are lagging behind last year by 4.5%, and has consequently adjusted its REBITDA outlook to a range of EUR60-65m (US$68.3m-74m).
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It also suggested it may look to raise additional capital even after disposing of its horticulture business last year to investment fund Straco for EUR120m. Back in November, Greenyard reiterated it expected full-year REBITDA to be down by 25% on the previous year, but at the time did not provide an end figure. In May, the company was expecting 10% growth in that metric.
“Greenyard will discuss the consequences of these events with its relationship banks in the coming days and management has been mandated by the board of directors to further explore different funding options, among others a capital increase,” the company said in a statement today (28 January).
Marc Zwaaneveld will head up the transformation team, which is tasked with dealing with what the company said are price pressures in the fresh product category, while increasing quality and service requirements in the same business area, along with ‘long fresh’, are pushing up supplier costs and waste levels.
Greenyard said it is “further transitioning its organisation into a vertically integrated partner for its retail customers”.
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By GlobalDataIt added: “Achieving this implies an important change for Greenyard and the retailers. Greenyard strongly believes that the fruit and vegetables market of the future will be operated more efficiently by a limited number of large players that partner closely with their customers. In the short term, this brings challenges and requires a new way of working in the market. However, in the longer term, the partnership model will reduce waste, improve quality for the consumer and improve margins in the value chain.”
In its first-half results to the end of September, Greenyard reported a 3.6% drop in sales to EUR1.98bn, while REBITDA slumped almost 40% to EUR41.2m. The company booked a total loss of EUR113m. At that time, Greenyard said net debt had risen to EUR517.4m, “primarily due to a lagging REBITDA performance”.
