Vion Food reports higher gross operating result in 2014 for ongoing activities

Date: 17-06-2015 Tags:

“With improved results, a re-structuring of operations and a robust financial position, Vion Food has a sound foundation for the future.”


Boxtel, 17 June 2015 – During 2014 Vion Food took steps towards a healthy future. For Vion Food, 2014 marks a new course which, following the sale of Vion Ingredients, provides a clear focus on the production and processing of fresh meat in the Netherlands and Germany.

  • Net turnover declined from € 7 billion to € 5 billion, primarily as a result of the sale of Vion Ingredients.
  • Normalised gross operating result (EBITDA) from ongoing operations increased from € 22 million to € 58 million.
  • Negative net debt of € 87 million. Strong liquidity position at the end of 2014; € 198 million in liquid assets and (effectively) without debt.
  • Robust financial position with a solvency ratio of 40.5%.
  • Important operational milestones were reached in the fields of sustainability, quality and animal welfare.

Tom Heidman, interim CEO Vion Food: “This has been a year of intensive activity for the business. After the sale of Vion Ingredients, 2014 was all about re-positioning and integrating our activities, our ambition being to improve our profitability. Thanks to the improved results, the operational changes which were implemented, adjustments to the footprint and a robust financial position, we have a sound foundation for the future. In combination with our access to worldwide markets, this gives us the opportunity to deploy our expertise effectively in order to further improve value creation from our livestock. We expect to appoint a new CEO by the end of summer, who will give further shape to the future of Vion.”

Operational Developments
In order to further improve the focus, in 2014 the country structure was transformed into a business unit structure with three business units: Pork, Beef and Foodservice. In addition, some business interests were sold, including Oerlemans Foods (May 2014) and the German convenience retail activities (July 2014), and the headquarters were slimmed down and moved from Eindhoven to Boxtel.

Steps were also taken in the optimisation of the network of production locations (the operational footprint). This included the closure of a number of small sites and the sale of some (smaller) locations, such as the recently announced closure of production locations in Anklam and Frankfurt am Main (both in Germany) on the one hand, and on the other hand the commitment to investments. For example, in August 2014 a significant investment of € 25 million was announced in production locations in Southern Germany, and in the Groenlo (the Netherlands) operation there is a € 4 million investment in production, storage, logistics and staff facilities.

During the first half of 2014 a start was made to the development of an improved, centrally-managed supply chain with a focus on valorisation. This means that the economic value of the livestock processed by Vion Food is further optimised and that we are ever-more responsive to the needs of the market. Vion Food is able to accurately align our product with the global market demands in export markets that are open to Vion, such as China, the United States, Japan, Korea and Australia.

During 2014 important milestones were also reached in the field of sustainability, quality and animal welfare. In October 2014 we started publishing inspection results and audit reports, leading the way in the sector. In Germany, Vion Food was declared the best meat company, and market leader in the field of animal welfare. Last year, a specially designed sewage treatment plant was built in Boxtel, and the Emstek (Germany) site was certified for the export of products to China.

Financial developments and financial position

Consolidated key figures

(Amounts in millions of euros)

2014

2013

Net turnover

4,992

7,033

> Net turnover from ongoing operations

4,833

5,031

> Net turnover from discontinued operations

159

2,002

Normalised EBITDA

60

196

> Normalised EBITDA from ongoing operations

58

22

Net earnings

-21

516

Net cash flow from operating activities

80

-41

Net debt

-87

1,459

Solvency

40.5%

15.7%

In 2014 the net turnover decreased by 29% as a result of the sale of some parts of the company, of which Vion Ingredients was the most important. At the same time, turnover was influenced by a lower price achieved for both pork and beef compared to 2013.

In 2014, normalised EBITDA was € 60 million as against € 196 million for the previous year. This decrease was mainly caused by the fact that the results of Vion Ingredients were included in the 2013 results until its sale in October 2013. For the ongoing operations normalised EBITDA improved strongly from € 22 million in 2013 to € 58 million in 2014, a result in part of positive price developments in the supply markets.

For 2014 Vion has realised a net result of € 21 million negative compared with a result of € 516 million in 2013. However, the net results for 2013 contains a non-recurring positive effect of € 781 million from the sale of group companies.

Net cash flow from operating activities was € 80 million. Apart from the positive operating result, this was also caused by a decrease of € 26 million in net operating working capital.

Significant increases in investments in ongoing operations, and restructuring and severance costs resulted in a cash out of approximately € 86 million.

There is a strong liquidity position with € 198 million of liquid assets at the end of the year. At year end the gross debt was € 111 million. On balance there was therefore a negative net debt of € 87 million. As a result of the sale of some company interests, solvency increased to 40.5%.

Outlook 2015
With the improved results in 2014, the operational improvements, improved footprint and the robust financial position, a healthy start has been made to deliver continued improvement of the results. The current course and focus on optimising margins by means of valorisation and cost efficiencies make us confident about the future. The work capital financing agreed in April 2015 gives the financial flexibility to implement the plans for the future.

Annual Report 2014
The Annual Report 2014 of Vion Food is available from today in Dutch, English and German on the Vion Food website www.vionfoodgroup.com. In 2014 EY was appointed as the external auditor.