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"Robust, profitable fiscal year with far less debt"

Greenyard to sell its UK fresh produce operations

In the 2021-2022 fiscal year, Greenyard's net profits rose by €15.7 million (€16.9 million versus €1.2 million) - a jump of 1308%. The company announced this on Wednesday, June 15, when explaining its annual results for that book year. Revenue growth continues, with a 1.4% increase from the previous year; €43.616 billion versus €42.996 billion. However, Greenyard also announced the discontinuation of its fresh produce operations in the United Kingdom.

In the last financial year, Greenyard significantly decreased its debt too. Excluding leasing debt, net financial debt decreased by €36.3 million, from €3.399 billion to €3.036 billion. That resulted in a reduced debt ratio from 2.9 to 2.4. This planned 2-2.5 debt ratio reduction was achieved a year earlier than planned.

"That was thanks to robust operating cash flow generation, partly due to lower interest payments and divestment proceeds. Divesting Greenyard Prepared Netherlands and Bardsley Fruit Enterprises' core assets in July 2021 also contributed to this decline in our net financial debt," they explained.

UK fresh operations for sale
Intending to sell its fresh produce operations in the United Kingdom is another example of these disinvestments. The company sees insufficient opportunities in the Post-Brexit fresh market. That is based on the integrated customer models the company strives for with its clients. Their UK fresh produce business records some €70 million in sales. That is less than one percent of the entire market. "We've generally found that stand-alone profitable growth there takes time," co-CEO Marc Zwaaneveld told the assembled press in an online explanation.

"Perhaps it would be possible in the future, but we've decided to divest our fresh produce business in the UK in the coming months. Brexit is putting pressure on our market, and disrupts supply chains. There's, thus, not enough room for us. We'll begin focusing our efforts on continental Europe, where we can work with these integrated customer relationships." However, in the frozen food sector, where the company has a leading position, it will continue to be fully committed to the United Kingdom.

Resuming dividend payouts
Greenyard's EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) climbed 6.1% (€166.5 million versus €156.9 million). "A nice result, despite the turbulence caused by unforeseen macro-economic conditions like the pandemic and war," says Zwaaneveld. The company, therefore, again decided to ask the Board of Directors to resume dividend pay outs after the end of the next fiscal year. Shareholders have not received these since the recent reorganization.

Marc says these results are thanks to primarily 'strict cost control', rising sales with robust, uniquely integrated client relations, and a good product mix. "We differentiate ourselves by working closely with our growers and buyers. It's important for us to engage in dialogue if, for example, you have to pass on cost increases to your customers. Don't just push up the prices; talk to people."

"We want to work with our clients to see whether other costs can be 'managed out'. For instance, you and a buyer can agree on what will be purchased. You can then plan better what must come in, and what transport needs to be arranged. Predictability is vital. You can, thus, optimize profits, strengthen the supply chain, while avoiding food waste," he explains.

Confidence in the future
The world currently finds itself in a highly challenging context, both macro-economically and socially, due to hyper inflation. This is not set to change any time soon either. Yet, Greenyard is reiterating its goal for its sales to reach the €5 trillion mark by 2025, and €200-210 million in adjusted EBITDA by March 2025. These ambitions do not take into account effects of possible future mergers and acquisitions.

Marc is still cautious about the next financial year. "It's impossible to predict what will happen with the geopolitical situation in Eastern Europe and hyperinflation. Who knows if it will improve or not. All I can say is that we've positioned ourselves well to be flexible and creative in a volatile market."

Also, Greenyard believes that, by further expanding it current range, it can win a fair share of its market. That market is growing by double-digits, and is expected to reach a total value of €150 trillion by 2030. The organization expects to grow mostly organically, but there could be targeted mergers and acquisitions so as to further fuel its strategy.

The company says this last fiscal year clearly revealed two of Greenyard's historic strengths. Firstly, it could continue building on the solid foundations of its, long-term and integrated relationships. And, with its strategy for 2030, the company is now also focusing even more on its vision of the future of food. This strategy shows a clear ambition: 'Improving Life': Contributing to a healthier future, by connecting plant-based nutrition and healthy lifestyles with sustainable food value chains.

You can read the entire Greenyard Group annual report here.

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