Sint-Katelijne-Waver, Belgium-headquartered Greenyard, reporting results for fiscal 2019/2020 on June 16, described the period as “a year of recovery, driven by a successful transformation.”
Overall net sales for the frozen, fresh and prepared vegetable and fruit processing and marketing company amounted to €4,061 million, up 3.8% year-on-year (YoY). Fresh product sales amounted to €3,263.4 million, up € 74.7 million from €3,188.7 million last year (+2.3%), mainly due to revitalization of the commercial relationships and ramping up of partnerships in the second half of the fiscal year. This also includes a recovery of the loss-making volumes that were terminated in the Fresh division.
Long Fresh sector sales totaled € 797.6 million, up €74.9 million from €722.8 million (+10,4%). The additional volumes were mainly sold to customers in the foodservice and industrial channels during the first half of the fiscal year, while sales to retail customers boomed in the second half, in part due to the frozen division’s new partnership with the Tesco supermarket chain.
Adjusted EBITDA, amounting to € 95.7 million (excluding the impact of IFRS 16), landed above the upper end of the initially given guidance. During the last weeks of the financial year, the Covid-19 pandemic had a positive impact of € 1.5 million to €2.0 million. However, the uptick was limited due to significant extra costs incurred to secure sourcing and operations.
The increase of € 3.2 million YoY (+48,4%) is attributable to the following elements:
- Fresh. Adjusted EBITDA recovered to €43.4 million, up €18.4 million versus €25.0 million last year (+73,9%). Successful implementation of transformation initiatives including strong cost control, workforce resizing, efficiency improvements and waste control took place. Moreover, throughout the fiscal year Greenyard’s customer-oriented strategy brought volume. As a result of cost rationalization and higher volumes, the negative trend of margin pressure on profitability was reversed.
- Long Fresh. The adjusted EBITDA amounted to € 53.9 million for AY 19/20 versus €41.9 million last year (+28,8%). This sector has significantly improved adjusted EBITDA compared to last year, when the Frozen Division suffered from the Listeria recall. Improvement is also credited to a better capacity utilization and production efficiency as well as savings on logistics and overhead costs.
A key driver in this was the better cooperation between the various Greenyard entities and production facilities. This profitability increase was realized despite some adverse impact from price pressure in mushrooms and the external sourcing of corn after the sale of the frozen vegetable factory in Baja, Hungary.
- EBIT. Earnings before interest and taxes amounted to a loss of € 2.6 million compared to a loss of € 133.4 million last year. On one hand, last year was impacted by a goodwill impairment which amounted to € 78.9 million as compared to a much lower asset impairment of € 7.6 million this year. On the other hand, last year €49.9 million of one-off adjustments were recorded mainly related to the Listeria recall and reorganization accruals. This year one-off adjustments were lower at €28.4 million and mainly related to a loss on the sale of Greenyard Flowers UK (primarily due to a write-off of biologic assets). The application of IFRS 16 Leases as from AY 19/20 had a positive net impact of €5.7 million on current year EBIT.
- Net result. The net result from continued operations amounted to a loss of € 68 million, compared to a loss of €192 million last year. The application of IFRS 16 Leases had a total negative impact of € 5.4 million on the net result of AY 19/20.
- NFD. Net financial debt reduction decreased by €30.7 million to €425.6 million in AY 19/20. This translates into a leverage of 4.4x in March 2020 (excluding IFRS 16), down from 7.1x in March 2019. The decrease is driven by the improvement in profitability and working capital, the gaining of disposal proceeds and the re-installed cash focus within Greenyard to bring down nominal debt.
As regards indebtedness and leverage, Greenyard obtained consent from its relationship banks on November 15, 2019 to waive its leverage and interest covenants until December of 2021, which is the maturity date of the syndicated bank financing.
The adjusted EBITDA was corrected for IFRS 16 to an amount of €133.4 million, with a net debt of € 660.1 million, resulting in a post-IFRS 16 leverage of 4.9x.
- Dividend. The board of directors has proposed to not pay a dividend for AY 19/20.
- Outlook. Based on the current expectations, Greenyard expects adjusted EBITDA (excluding IFRS 16 impact) for the full year ending March 31, 2021 to range between € 100 million and €105 million.
Comments from Chief Executives
Reflecting on the results, Hein Deprez, Greenyard’s co-chief executive officer, stated: “We live in turbulent times. Our society and our customer landscape have changed. Also, our company has changed. This change was needed and will gear us up for the future. The way we have responded to the challenge of securing the food supply chain during the Covid-19 quarantine period clearly demonstrates us strength and relevance.”
Co-CEO Marc Zwaaneveld added: “This fiscal year started just after the announcement of our transformation plan, followed by the strong implementation thereof. It was paramount to install an agile organization with a continuous improvement culture. From the start, the plan showed an untapped efficiency and profitability potential. Throughout the year, the recovery continued and exceeded expectations. Greenyard is on its way to regain financial health and will be ready for sustainable growth.”