Wessanen, the Dutch food group, posted a significant second-quarter operating loss today (29 July), hit by impairment charges at its US beverage unit.
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Losses totalled EUR 5.4m (US$7.6m), which Wessanen blamed on financial irregularities found at it North American drinks unit American Beverage Corp. (ABC).
“The investigation into reporting irregularities at ABC has nearly been finalized and a forensic investigation has been initiated. We conclude that the equity position at Royal Wessanen at year end 2008 was overstated by approximately EUR15m, some EUR 5m higher than indicated on June 15, 2009,” said Frans Koffrie, Wessanen CEO.
The company recorded a net loss of EUR84.6m for the quarter versus EUR6.8m in the restated second quarter of last year. Wessanen put this down to the write off of deferred tax assets of EUR80.6m in addition to the group’s operating loss.
Revenue, however, increased by 4.8% to reach EUR408.5m.
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By GlobalDataNet debt decreased by EUR10.1m to EUR203.7m as at 30 June as a result of positive cash flow from operating activities, translation effects from a weaker US dollar and low capital expenditure.
Struggling with heavy debts, the company was earlier this year planning to sell its North American operations to shift its focus back to Europe. The company said this review has now been put on hold.
A possible sale of the company’s Tree of Life division in the US is progressing, however, and has not been affected by events at ABC, Wessanen said.
Earlier this year, Wessanen CEO Ad Veenhof left the company a day before issuing its annual results, following strategic differences with the company’s supervisory board.
