Greenyard's Board of Directors has appointed Marc Zwaaneveld as its co-CEO. Zwaaneveld and Hein Deprez will share the role of CEO in this Belgian company. This decision is a follow-up of Marc Zwaaneveld's appointment as Chief Transformation Officer.
Hein Deprez will focus on rolling out Greenyard's strategic partner model with its retailers. Marc Zwaaneveld will “guarantee the seamless, well-framed, efficient transformation plan within the company", reads a press release issued by Greenyard. "In this way, Greenyard can quickly and efficiently be given a new dynamic."
Hein Deprez must share his job as CEO with Marc Zwaaneveld.
Greenyard is preparing definite action plans for improvement possibilities. These are based on the initial analysis and are being done in partnership with an external consulting firm. The first savings have also already been realized. The next steps will be taken toward finding financial options. These were recently announced.
Increasing mountain of debt
Greenyard has recently found itself in stormy weather. They find themselves in this situation after another profit warning was issued at the end of January. Last year, there were signs of recovery in September and October. Despite these, the trend was reversed in the final months of 2018. The company's turnover was, therefore, 4.5% lower. This resulted in the expected REBITDA having to be adjusted to between EUR60 and 65 million.
The profit warning sent the company's shares into free fall. Even more worrying is that Greenyard's debt ratio is on the rise. A REBITDA of EUR140.2 million was reported in the 2017/2018 financial year. That, in itself, was a mere 4% decrease compared to the previous book year.
This decrease in REBITDA illustrates that the company has been in deep financial waters for a while now. The Fresh division reported the highest drop in sales (-2.4%) in the 2017/2018 fiscal year.
This was partly caused by a loss of volume in Germany and Belgium. In Germany, an important client decided to take purchasing into their own hands. This caused the loss of a portion of Greenyard's turnover. In Belgium, it is primarily the price competition that is creating a difficult market.
The positive results from France and the USA could not completely compensate for these negative effects. After taking over Mykogen in 2017/2018, Greenyard's debt ran up to EUR419 million.
Continuously difficult market
The first half of the 2018/2019 fiscal year ended on 30 September. It could not stem the tide. Europe's dry summer hampered the supply of products. This, in turn, had an impact on prices. The difficult Belgian and German market situations also continued.
In addition, the factory in Hungary was hit by a listeria outbreak. This was followed by a halt in production and a recall action. This contamination resulted in a once-off EUR28 million cost item. Revenue was more than three percent lower in these first six months. It came to EUR1.9 billion. As expected, the REBITDA fell dramatically over this period. It ended 40% lower at EUR41.2 million.
Debt climbed even further in these months. It came to EUR517.4 million. This was mostly due to low profitability, once-off costs, and the building up of stock in the company's Long Fresh division. A profit loss of EUR68.1 million was reported.
This increasing debt means that Greenyard surpassed the 4.4x debt ratio agreed upon with the banks. The company was forced to sell its Horticulture branch. This brought in EUR120 million. This money was immediately used to reduce the company's mountain of debt.
Greenyard is currently an estimated EUR350 million in the red. This is 5.5 or 6 times more than the EBITDA. It is, therefore, still higher than the debt ratio agreed upon with the banks. This ever-increasing debt ratio is the company management's biggest source of concern.
According to analysts, between EUR70 and 120 million is needed to save Greenyard. It is not yet clear where the company will get this kind of money. Selling equipment and property will not bring in enough, say the analysts. An extra capital increase on the stock exchange is another option. Solutions are being worked on, under the leadership of Marc Zwaaneveld.