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Vion Builds a Strong Foundation Despite a Challenging Market

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Vion Builds a Strong Foundation Despite a Challenging Market

Vion Builds a Strong Foundation Despite a Challenging Market
April 02
16:47 2019

In 2018, Vion, the international meat group, finalised its four year business plan to invest in and modernise its production footprint in its home markets of Germany and the Netherlands. This contributed to the annual results for 2018, where a strong operational cash flow reduced the net debt position and further improved the solvency rate of the company. However, the EBITDA was below that of 2017, due to low cattle-hide prices and high pig prices in an exceptionally warm and dry summer.

In 2018, revenues decreased by 7.9% to €4.670 billion, while volumes only decreased by 2.9%. This decline in revenue was mainly caused by lower sales prices, which were more than offset by lower purchase prices for raw materials and consumables, resulting in improved gross margins.

However, the improved gross margins were more than offset by the increased operating expenses, resulting in a decrease of the earnings before interest and taxes of €6.7 million.

Ronald Lotgerink.

Normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased from €64.0 million in 2017 to €60.5 million in 2018.

During 2018, Vion made significant investments of €61.2 million on improving its competitive base, for example at it beef plants in Leeuwarden and Waldkraiburg. A €35 million investment is planned for Vion’s Boxtel site.

Ronald Lotgerink, chief executive of Vion, comments: “The initiatives included in our strategic plan to modernise our production footprint will provide Vion with a strong competitive base for our future growth. On 28 February 2019, we announced the last initiative, an investment of €35 million in our production facility in Boxtel, which will enable a shorter supply chain and a sustainable way of working at a single location. The initiatives contribute to our operational profit, but they could not fully compensate for the effects of low cattle-hide prices and high pig prices during a very dry summer. However, we managed to decrease our net debt due to good working capital management and a lower number of investments and restructuring costs compared to 2017. Therefore, our balance sheet remains strong. By building on this solid foundation, Vion will initiate a new strategic plan with a focus on building balanced chains (BBC) in close co-operation with our supply chain partners, thus ensuring a sustainable future for our suppliers, our customers and ourselves.”

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