Dry weather and recalls put pressure on Greenyard's results

Over the first three months of the fiscal year, Greenyard realised a turnover of EUR1.093 billion. This amount is 1,5% lower than the same period last year. "Despite only a slight decrease in revenue, this quarter was characterised by longer-than-expected pressure on prices and heavy competition in our markets. There were also unexpected factors such as the extraordinary weather condition and the recall action. This action was due to a suspected Listeria outbreak", says CEO Hein Deprez, in reaction to the results.

The company's Fresh and Frozen segments are to blame for the decline in revenue. For Fresh, turnover fell by 2,4% compared to the previous year, ending at EUR884.7 million. The ongoing price war in the fresh sector has made for a challenging market. Greenyard's De Bakker operations in the Netherlands and France managed to realise good results. These were, however, not enough to absorb the shrinkage in Belgium, Germany, and Poland. Greenyard implemented "new, future-orientated operational models and a new distribution footprint" in Germany and Belgium. The results of these changes will, however, only be visible in the medium term.

The company's Long Fresh division's revenue decreased by 2,1% to EUR174.7 million. Deep frozen activities grew, despite the hot summer. However, this growth has been negated by poor sales in the Prepared section. Here, poor sales figures are mainly due to the termination of several unprofitable contracts. New contracts were then also started and delivered.

There were also recent recall actions of frozen products. This action was in connection with the possible contamination of these products with Listeria monocytogenes. This action greatly affected the Long Fresh division. As Greenyard had already communicated at an earlier stage, this will have an effect on the financial year's figures. For now, the company does not see any reason to adjust its estimate of an EUR30 million net loss, after insurance. According to Greenyard, less than 20% of this amount will make its way through the total book year's REBITDA.

Greenyard released a press release about this recall action and its consequences. It reads: "An important plan of action includes the efforts the company is making to alleviate the effects of the recent recall action. Here, frozen products that were produced in our Hungarian plant that had possibly been contaminated were recalled. We have carried out tests in this production facility in collaboration with external experts."

It goes on to state: "These test results have been confirmed by the Hungarian authorities. We are pleased to be able to say that all these tests have had a very positive result (this means that the tests were negative for the presence of Listeria monocytogenes). This paves the way for the reopening of this plant in the short term. More information about these actions with regard to Listeria will follow in the coming weeks. This will be released as soon as more comprehensive details about customers' claims are available."

A second factor was the hot, dry European summer. These weather conditions caused irregularities in harvesting. This, in turn, resulted in fluctuations in prices and volumes. These variations filtered through to the Fresh and Long Fresh divisions' results. In the Long Fresh division, a possible 30 - 50% shortage for certain products has been predicted.

The Horticulture department noted a considerable increase in sales. These were up 35% compared to the previous year. This division's turnover came to EUR34,4 million. There has been an especially sharp climb in the sales of potting soil and bark to Belgian retailers and Polish professional customers. The takeover of Mycoculture also contributed to the growth within this sector's activities.