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March 15, 2019

Asset sales, jobs may go in Greenyard “transformation” plan

European fruit-and-veg giant Greenyard today (15 March) set out the results of its "transformation" plan in a bid to boost sales and profitability.

By Dean Best

European fruit-and-veg giant Greenyard today (15 March) set out the results of its “transformation” plan in a bid to boost sales and profitability.

A clutch of assets are to be sold – with a whole division potentially up for sale – and more than 400 jobs could be cut as the Belgium-listed group looks to “shape the future of Greenyard”.

In recent months, Greenyard has informed the market it is facing pressure on sales and margins amid what it calls “continued pressure in the food retail landscape”, particularly in Belgium and Germany.

In January, the company hired Marc Zwaaneveld to head a “transformation team” to work on price, quality and service levels.

Last month, Greenyard installed Zwaaneveld as co-CEO alongside incumbent Hein Deprez. At the time, the company said “the initial validation” of a “turnaround programme” led by Zwaaneveld “positively shows substantial areas for improvement to contribute to next fiscal years’ results”.

This morning, the group published a series of “immediate, short- and longer-term actions”, which include a “footprint rationalisation” and “improved cost management”.

Greenyard said it is “exploring the option” of selling its prepared-foods division – which supplies products from canned veg to pasta dishes – to boost its balance sheet. The company insisted it would not look to sell its fresh and frozen businesses.

In addition, the company is expecting to generate EUR50-75m (US$56.6-79.3m) from further disposals of “non-core assets” across all its divisions. It said it had “already initiated the first divestment projects”.

Another part of the plan has seen Greenyard look at its production network. The company said it has “identified a number of assets and locations in each of the divisions that are no longer essential to maintaining the service levels towards its customers or no longer provide the required return on investment for the group”. One move will see Greenyard close or sell its Baja frozen plant in Hungary.

Meanwhile, Greenyard said some 422 jobs might be impacted in 2019 across different countries, but primarily within its fresh operations in the UK and Germany.

The group said it expects the plan to boost its recurring EBITDA in its 2019/2020 financial year and give a cumulative recurring EBITDA improvement of EUR44m for the 2020/2021 period. Greenyard expects to achieve recurring EBITDA of over EUR100m in 2020/2021, thanks in part to the “transformation plan”.

In the year to the end of March 2018, Greenyard’s recurring EBITDA was EUR140.2m, down 3.8% on a year earlier. The company’s net sales fell 1.7% to EUR4.18bn.

In a further announcement, COO Carl Peeters is to leave the company, by 31 May at the latest.

Zwaaneveld said: “We believe Greenyard has a bright future. By driving a stringent execution of the transformation plan, we can unlock a large untapped potential that will significantly improve our efficiency and profitability. In addition, our analysis for a refocused footprint over all divisions will ensure that we continue to guarantee our customers the service levels they are used to, whilst optimising Greenyard by divesting those assets that are no longer essential and weigh on our cost structure.”

Deprez added: “This year’s extremely dry summer, the recall action [at the] beginning of the summer, but, in particular, the continuing market pressure have called for important decisions. After years of growing Greenyard, it is time to consolidate and to use our strength and scale to become an even closer partner to our customers. We want to remain retail’s strong and efficient partner, even stronger than today. We believe that these measures are needed for a healthier future for Greenyard, its employees, its customers, its suppliers and its shareholders.”

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