News Pigs
New financial debacle by meat processor Vion
Vion has realized a loss of almost €90 million last year, as shown in the annual figures that were finally published today after months of delay. The management of Vion claims high and low that better times are ahead after the announced departure in Germany, but also acknowledges risks threatening the continuity of the long-troubled meat company.
A glimmer of hope in the figures is that they are less negative than a year earlier: In 2022, the loss was €108 million, which decreased to just under €90 million in 2023. Of this amount, €38 million is attributable to exceptional impairments and restructuring costs related to the departure from Germany. The German divestments are expected to turn things around at Vion, that's the idea.
Although buyers have been found for various German locations in the meantime, Vion is far from out of the woods. The company openly states that there are risks to the continuity of the business. This includes a decrease in livestock and animal diseases. These factors will continue to loom over the market, once Vion is no longer active in Germany. African swine fever could also suddenly appear in the Netherlands today or tomorrow. The Dutch pork sector would then immediately lose access to export markets outside of Europe, with all the consequences that entails. The risk of shrinking livestock is also mentioned. With various cessation schemes (Lbv and Lbv-plus), it is still difficult to estimate how much the Dutch pig population will be further affected in the coming years. According to Vion CEO Ronald Lotgerink, the shrinkage has been faster in recent years than expected.
Solvency almost in danger zone
Furthermore, Vion states that liquidity and solvency ratios have remained adequate. In 2022, similar wording was used, but solvency dropped by 9 percentage points to 30.8%. In 2023, this further dropped to 26%. In fact, Vion is not quite in the danger zone yet, but given the decline in recent years, it is on the verge of happening if things do not change quickly. In 2020, solvency was still at 46%. Shareholder ZLTO does not seem financially strong enough to intervene if things go wrong.
In the coming years, Vion is focusing on further cost savings. The goal is to cut costs by €150 to €200 next year. It was recently announced that nearly 200 jobs will be cut. The effects of the restructuring plan will be visible in the results from 2025, as promised by Vion. Vion also expects to refinance loans by then, which they believe will help mitigate the risks to continuity. The recent drop in interest rates is favorable for them, although lenders will still demand high rates due to the vulnerability of the company.
New management
Under a new but familiar leadership, Vion aims to navigate more stable waters in the coming years. It was recently announced that CFO Tjarda Klimp will succeed Lotegerink as the ultimate responsible person next year. The vacant CFO position will also be filled internally.
