Fruit and vegetable company Greenyard keeps losing turnover and profit. The company has appointed a transformation team and is in talks with the banks, hoping to find a solution for their mounting debts.
In need of a new way of working
Turnover dropped by 4.5% in the last quarter of 2018, Greenyard Foods announced. Operational gross profit (rebitda) turned out lower than expected and will end up somewhere between 60 and 65 million euros for the financial year 2018-2019 (which will end right before the beginning of April). That’s a lot lower than the 80 to 85 million euros expected before.
The fruits and vegetables producer claims to be under constant pressure from the supermarkets, which keep demanding lower prices and higher quality. This leads to higher costs and more waste for Greenyard’s suppliers, they claim in a statement to the press. The pressure is highest in Germany and in Greenyard’s domestic market of Belgium.
Greenyard wants to become an integrated retail partner for both fresh food and frozen food: the company is striving for more verticality, believing that “the fruit and vegetables market of the future will be managed more efficiently by a limited number of big players, closely working together with their clients”. Of course, that partnership model does entail short-term challenges and demands a new way of working, but it may improve Greenyard’s admittedly very small margins across the entire value chain.
Turnaround plan with immediate action
Greenyard also had a number of internal issues in 2018: nine people died because of a listeria infection in one of the group’s factories in Hungary. The company was forced to call back products en masse and had to close a number of production lines for research and decontamination. Those callback actions set them back about 30 million euros.
In order to bear the financial consequences of the growing mountain of debt, Greaanyard Foods lost its potting soil division in 2018, but that won’t suffice after these disappointing results. A transformation team has been appointed under the leadership of Marc Zwaaneveld, who is also joining the board of directors. He will have to come up with a turnaround plan with immediate action. Further reorganising and cost-cutting may be needed.
Greenyard will also be talking to the banks over the coming days to see what their options are. The company is considering a capital increase, but “new disinvestments are also possible” according to owner Hein Deprez in De Tijd. “Not core activities or entire divisions, but rather sale and leaseback operations in real estate,” he adds carefully.
