Greenyard Sells Plant in Hungary, Posts Annual Results
Sint-Katelijne-Waver, Belgium-headquartered Greenyard has sold its frozen vegetable processing plant in Baja, Hungary to a fellow Belgian company, Mouscron-based Roger & Roger. Terms of the acquisition, which includes all assets and responsibility for employment of approximately 350 workers, were not disclosed.
The sale, publically announced on June 3, came about nine months after the factory resumed output following the identification of one of its freezing tunnels as the root cause of a Listeria monocytogenes outbreak that resulted in closure last year. The shutdown followed large-scale recalls of frozen corn, peas, spinach and vegetable blends amidst assertions that the presence of such bacteria in products packed at the site could potentially have been responsible for a number of deaths and illnesses among European consumers in early 2018.
The buyer, a producer of potato crisps and corn-based tortilla snacks in Europe, distributes its product line to customers in more than twenty countries. Owned by the Dick family from West Flanders, Roger & Roger has been in business since 1999 and employs more than 350 people.
The sale is part of the transformation plan of publically traded Greenyard (listed on the Euronext Brussels exchange as GREEN) to improve operations and reassure stockholders by optimizing, rationalizing and consolidating the vegetable and fruit supplier’s footprint. As part of this program, unveiled in March, it will shift former output at the Hungarian plant to other production sites in Europe, thus ensuring uninterrupted shipments to meet customer contracts.
Commenting on the transaction, Roger & Roger CEO Yves De Vinck stated: “Since a certain time we show more than normal interest in potential opportunities to further develop our business in Central Eastern Europe. The experience and knowhow of the Hungarian farmers, together with the high motivation of employees at the site, convinced us to acquire this plant from Greenyard. In the coming months we will disclose more information on the future plans and investments we will make, to secure continuity and new growth for all stakeholders.”
Charles-Henri Deprez, managing director Greenyard Frozen, added: “We are very pleased that Roger & Roger, a socially responsible operating company, acquires our frozen plant in Hungary. It has decided to expand its business to the Hungarian market and has a clear intention to invest in it. Furthermore, the transaction safeguards the interest of all our stakeholders.”
Annual Results Posted
Meanwhile, on June 4 Greenyard announced full year figures for the 12-month period ending March 31, 2019, that showed profitability at the upper ends of its guidance of € 64,5 million. The result was achieved despite a number of challenges faced, including fierce market pressure in the fresh segment, extremely dry weather during Europe’s prime harvesting season, and managing consequences of a massive recall action in its frozen division.
Overall net sales amounted of € 3.911,5 million, resulting in a decline of 4,3% year on year (YoY).
Fresh sector products generated € 3.188,7 million in sales, down €154,2 million from €3.342,9m last year (-4,6%), mainly due to a volume decline from continuing market pressure in most of key markets, in combination with the effects of the summer drought. Sales in the fourth quarter recovered slightly from the Q3 low performance, as receipts totaled €810,7 million (-5,0% YoY), versus third quarter sales of €730,2 million (-6,6% YoY).
Long Fresh sales, which includes Pinguin brand frozen sales, totaled €722,8 million, down €20,0 million from €742,8m (-2,7%). The decline was primarily due to the recall of products produced at the Hungarian plant and related delays in production and distribution of frozen vegetables in the summer of 2018. This was alongside the effects of the extreme summer weather conditions, resulting in lower crop yields, only partly offset by better product mix and prices. In the fourth quarter, Long Fresh continued its steady recovery from the previous period. Q4 Sales amounted to €196,5 million (0,8% YoY) versus Q3 sales of € 194,5 million (-2,0% YoY).
Transformation Plan on Course
Greenyard remains on course in executing its Transformation Plan under the direction of Co-CEO Marc Zwaaneveld, according to a statement issued by the company. The plan is expected to result in an increase in adjusted EBITDA of €20,0 million in AY 19/20, and a cumulative increase of €44,0 million for AY 20/21, resulting in an adjusted EBITDA of more than €100,0m in AY 20/21. Greenyard has already notes that its April 2019 performance ended above budget and above last year.