Loss-making Canadian food manufacturer GreenSpace Brands is undergoing a strategic restructuring process which will include the disposal of its Rolling Meadow Dairy brand and a reduction in its headcount.
Nine jobs are set to go as part of changes to the business model being instigated by Toronto-based GreenSpace, which also said in a statement late yesterday (31 January) that chief financial officer Greg Guyatt will be leaving the firm for another senior finance position. Cindy Leung, who is currently vice president of finance, will fill the role on an interim basis.
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Guyatt only joined the Toronto-listed business during the summer, when he replaced Leung, who was then also serving as the interim finance chief after the previous CFO Keith Jackson resigned. Before Jackson, Matthew Walsh headed up the finance operations, but he also left in 2017.
Greenspace is selling the Rolling Meadow Dairy brand, excluding the associated egg business to Canada’s Agrifoods International Cooperative subsidiary Organic Meadow Limited Partnership for CAD1.8m (US$1.4m).
However, the amount is small in comparison to the losses the company has made in the past three years. GreenSpace reported a loss for the year to 31 March 2018 of CAD4.4m versus a CAD3.2m shortfall in 2017 and a CAD5.3m loss the previous year.
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Last year, it generated net revenue of CAD56.3m, an increase from the CAD37m in 2017 and CAD10.2m in 2016.
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By GlobalData“The restructuring and revised operating model will focus on increased accountability and responsibility at a brand level and will bring with it a flatter organisational structure promoting GreenSpace’s ability to be nimble and bring products to market faster than traditional CPG’s,” the statement read.
GreenSpace said it will incur a restructuring charge in its fourth quarter, and the strategic shift in its business model is expected to reap around CAD850,000 in savings annually.
Chief executive Matthew von Teichman commented: “The recently-announced sale of Rolling Meadow Dairy will result in improved gross margins and the strengthening of our balance sheet. The sale, as well as the strategic restructuring, highlights a shift in our strategy and how we manage our business.
The restructuring recognises that our platform strategy, although successful within the sales function, did not meet our expectations across all functions within the business. We have delivered top-line growth consistently since going public almost four years ago, but have not yet demonstrated significant operating leverage in our business. This shift in strategy starts us down a new path of brand level accountability, a strengthened focus on innovation and nimbleness, and a more dedicated focus on EBITDA, while still driving towards a strong organic growth profile.”
Meanwhile, GreenSpace said the sale of Rolling Meadow Dairy “represents a guaranteed consideration of approximately 0.6x sales, with an opportunity for total consideration of approximately 1x sales”, including a royalty based on revenue over four years.
