Australia-based Beston Global Food Co. (BFC) announced it is to close its China and Thailand offices as part of a strategic review.
The dairy and meat business said it has also saved AUD1m (US$699,206) through head office redundancies.
In a letter to shareholders released today (27 June), Beston chief executive officer Jonathan Hicks outlined actions the company has taken over the last three months.
Dairy industry veteran Jonathan Hicks, who was brought in as CEO of the loss-making firm late last year after Sean Ebert stepped down in October, has initiated a turnaround strategy based around volume, value and velocity.
“I commissioned a full, ‘top-to-bottom’ commercial and HR review across the company focusing on our major costs and value drivers within the business; with the purpose of identifying cost savings and improved productivity and efficiencies, while at the same time building new revenues and putting in place new profit-generating initiatives,” he said in the letter to shareholders.
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He said a number of organisational changes have been made within BFC in order to focus on the core business of dairy and meat, which has resulted in a number of redundancies.
“The cost savings relating to the redundancies are in the order of AUD1m on an annualised basis,” he said.
“These costs savings are in addition to the net savings of over AUD1m per annum resulting from the restructuring changes implemented in the first half as advised to the ASX [Australia’s Securities Exchange].”
Turning to its operation in Asia, Hicks said: “BFC has, over the period since 2015, operated two main international offices in China and Thailand. Both China and the South-east Asia markets are critical to BFC.
“As a consequence of building a brand presence in these markets, over the past few years, BFC has been examining ways of achieving its objectives in these markets in a more cost effective manner.
“A number of strategic sales and distribution relationships have now been put in place to service, and importantly, grow BFC’s presence in these regions. This has enabled BFC to commence winding down its two offices in China and Thailand.”
Hicks said the the impact on BFC’s cost line from winding down these offices and increasing the use of third-party sales and distribution arrangements in-country is expected to be “significant” when fully implemented.
The scale of job losses has not been revealed.
Hicks also told shareholders BFC’s domestic sales channels have been “growing steadily”, with increasing penetration into both the retail and foodservice sectors, and that a number of contracts with large domestic retailers have been negotiated, “representing an increase in both volumes and value to BFC”.
He said BFC has been successful, over the last three months, in achieving new sales of mozzarella cheese into markets such as Canada, Japan and China.
Hicks added that BFC is also collaborating with a number of large FMCG organisations on co-branding and co-packing strategies that “will unlock value and returns for BFC at a retail level in Australia”.