After summer, results of September and October picked up. Unfortunately, these early signs of recovery reversed in November and December. On one hand, this was caused by the competitive retail landscape with further increasing price pressure in Fresh product categories, predominantly in Germany and Belgium. On the other hand, continuously increasing quality and service requirements from retailers in Fresh and in Long Fresh are pushing up suppliers’ cost and waste levels.
As a consequence, sales are lagging behind last year by -4,5% and has, more importantly, an impact on margin generation given that Greenyard operates at limited % margins. Therefore, Greenyard revises its REBITDA forecast for AY 2018/19 to a range of € 60-65m, after deconsolidation of the Horticulture segment which was sold end of 2018.
Greenyard is currently further transitioning its organization into a vertically integrated partner for its retail customers. Achieving this implies an important change for Greenyard and the retailers. Greenyard strongly believes that the fruit and vegetables market of the future will be operated more efficiently by a limited number of large players that partner closely with their customers. In the short term, this brings challenges and requires a new way of working in the market. However, in the longer term, the partnership model will reduce waste, improve quality for the consumer and improve margins in the value chain.
Based on this current ongoing market imbalance, the measures Greenyard took over the last six months have not been sufficient to close the gap. Initiatives have been taken in the fields of purchasing and procurement, systems and processing and key account management. Therefore, building further on these medium-term actions, a transformation team has been set up and is led by, Marc Zwaaneveld, a seasoned senior manager with a proven track record, who also joins the Leadership Team. The new team is developing a comprehensive turnaround plan which will include actions that will be implemented immediately. Hence, Greenyard will focus as well on additional commercial achievements and acceleration of the started mid-term projects as on aligning the overall cost base.
Greenyard will discuss the consequences of these events with its relationship banks in the coming days. In parallel, the Board of Directors has mandated management to further explore different funding options, o.a. a capital increase. Greenyard will update the market in due course.