Vion Food returns to profit and continues multiyear investment program

Date: 14-04-2016 Tags:

Boxtel, 14 April 2016 – Today, Vion Food announced that it returned to profit in 2015 with a net profit of € 22 million versus a net loss of € 21 million in 2014. This was achieved in spite of challenging markets, in particular for pork, that negatively impacted EBITDA. In 2015, Vion Food continued its ongoing efforts to improve its network of production locations by closing some sites and investing € 64 million in the remaining facilities.

  • Net profit of € 22 million versus a net loss of € 21 million in 2014.
  • Operating result increased by € 11 million to € 31 million (2014: € 20 million) in spite of lower EBITDA helped by lower restructuring and impairments.
  • Net cash of  € 52 million and de-facto debt free.
  • Robust balance sheet with a 44.1% level of solvency.
  • Important commercial and operational achievements and significant investments.

Strategy started in 2014 is paying off
Francis Kint, CEO Vion Food: “In 2015, we continued the line of progress that was started in 2014. We invested in improving our production infrastructure. Over these two years, we have reduced the number of our sites from 35 to 25, without losing volume. We have also made further progress in value creation from our livestock by a better valorisation of the animal parts and implementing programs around animal welfare and regionality. In 2015, Vion Food also received the first clear signs of recognition of its unique position to promote trust in the industry. Acting as a “funnel” between a fragmented animal husbandry on one hand and the meat processing industry on the other hand, Vion Food is the natural – much needed – chain coordinator. In this role, Vion Food encourages and promotes animal friendly husbandry,  guarantees the origin of the meat and ensures the traceability of the chain. It secures the food safety, quality and the appreciation of end consumers.”

Commercial developments
In 2015 market conditions were tough, putting pressure on the entire sector, in particular the pork meat industry. Vion Food strives to improve the situation of its farmers by increasing its own efficiency, by creating and managing supply chains and by using the scale of its operations to optimise valorisation and offer better access to the global markets.

In 2015, the role of chain coordinator was put into practice in our three divisions. Our Pork division organised the full chain of Good Farming Star pork products: from a distinct group of 150 farmers – working on an animal welfare program – up to the delivery of both fresh meat and raw materials for the production of transformed meat products, thus ensuring the sustainability of the program. Our Food Service division signed a multiyear agreement with a large hamburger restaurant chain, based on a transparent and sophisticated tracking of industry and market KPIs, which was made possible through Vion’s presence in the full value chain. Finally, our Beef division received the prestigious ECR Award for a program of bundling fresh products in its site in Groβostheim for combined delivery to retailer DCs, thus saving 2,6 million road kilometres per year.

Operational developments and investments
During 2015 Vion Food further optimised its network of production locations. Two pork sites (Bad Neustadt and Straubing) and two beef sites (Anklam and Frankfurt) were closed. In parallel, significant investments were made to expand and modernise our sites in Groenlo, Landshut, Vilshofen and Waldkraiburg. When the investment in Waldkraiburg is finalised in August 2016, this site will be one of Europe’s most modern and best-performing beef slaughtering and deboning facilities. In our Food Service division, we have invested in both locations (Holzwickede and Groβostheim) to increase our production capacity and broaden our competence. Overall, Vion Food invested € 64 million in 2015.

Financial results and financial position

Consolidated key figures

(Amounts in millions of euros)

2015

2014

Net turnover

4,571

4,992

> Net turnover from ongoing operations

4,571

4,833

Normalised EBITDA

46

60

> Normalised EBITDA from ongoing activities

45

58

Operating result

31

20

Net result

22

(21)

Cash flow from operating activities

34

80

Net cash

52

87

Solvency

44.1%

40.5%

In 2015, the company’s net turnover was negatively impacted by low meat prices, particularly in our Pork division. Although volumes remained stable, this impacted margins. As a consequence normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) from ongoing operations decreased by € 13 million to € 45 million (2014: € 58 million). Nevertheless, operating result increased by € 11 million to € 31 million (2014: € 20 million), helped by a € 18 million decrease in  restructuring expenses and a € 6 million decrease in impairments.

In 2015, Vion Food’s net result returned to a positive figure, with a net profit of € 22 million versus a net loss of € 21 million in 2014. This was mainly caused by the € 11 million improvement in operating result and the € 16 million decrease in net financial expenses, mostly because of an exceptionally high interest charge related to pensions in 2014.

With a gross debt of € 70 million and cash and cash equivalents of € 123 million, Vion Food is de-facto debt free and has € 52 million net cash (2014: € 87 million). Our equity position has increased from € 397 million to € 416 million and our solvency remained very strong in 2015 at 44.1% (2014: 40.5%).

Outlook for 2016
In the first part of the year, the pork sector is expected to face continuing price pressure, although these will be partially alleviated by the EU private storage aid. We do not foresee a return to more normal price levels before the second half of the year. In the beef industry, the managed reduction of milk production will impact the volumes of cattle being slaughtered. In our Food Service division, we plan for continued growth and expansion of our distribution through the broadening of our frozen product range.

Annual report 2015
Vion Food’s 2015 annual report is now available in English, Dutch and German on the company’s website www.vionfoodgroup.com.