Feature Insights
How is the meat company Vion addressing its major issues?
Whether the management of Vion was granted a long vacation this summer is the question. The meat company has various headache-inducing files on the table that require a lot of attention both strategically and operationally. In addition, the meat company is working towards the delayed publication of the annual figures in September, which are likely to once again not be satisfactory. Also, more clarity is needed on the settlement of the announced departure from Germany. All these troubles are a breeding ground for rumors and speculations.
It is clear that Vion faces a tangle of problems and challenges. They, along with other major pig slaughterers in Europe, are the subject of trade disputes between Beijing and Brussels. The main location in Boxtel lost recognition from the NVWA a few weeks ago to export to third markets such as China, although this has recently been resolved, as Vion states. About 90,000 pigs are slaughtered weekly at the main facility. Based on €20 per slaughtered pig, this issue is quite costly.
Could this have been the reason why Vion was the driver of the recent price pressure on the pig market? They were the first to announce a reduction last week, while other prices remained stable afterwards. This move sparked a flood of criticism, but the reduction was not reversed on Monday.
Financial position
Meanwhile, there are increasing questions in the sector about Vion's financial position. In previous years, Vion usually released its annual figures in March. Last year, this was postponed to July, and this year the figures will only be released in September, according to the spokesperson. The delayed publication is said to be partly due to the settlement of the announced departure from Germany. In 2022, due to the problems in Germany, a one-time charge of €63.5 million had to be taken, leading to a loss of over €100 million. This was under the motto of "better to take the pain than to muddle through," as CEO Ronald Lotgerink stated.
When asked last summer if a departure from Germany was an option, he firmly stated that they did not want to completely divest the loss-making German activities. Since June, we know that Vion does indeed want to close the door in Germany and has put the assets up for sale. Various European slaughterhouses have reportedly expressed interest as buyers, and private equity firms are likely interested as well.
Whether Vion can fetch top dollar for the eleven German locations remains to be seen. However, the proceeds would be more than welcome. It is likely that the annual figures for 2023 will not bring joy to Boxtel and owner ZLTO. The results of other Dutch slaughterhouses have deteriorated one by one in the past year, which is not a favorable sign. Solvency took a significant hit in 2022, dropping by 9 percentage points to 30.8%. Although not critically low, a new loss will further worsen this figure.
Rumors about ZLTO's interest
ZLTO does not seem financially strong enough to provide support. Within ZLTO, there are now discussions about whether they are still the right owner of Vion, or whether - as rumored - a buyer should be sought. These may be wild rumors, but this discussion is not entirely illogical. In 2016, financier ABN Amro approached various market parties - including Van Drie Group - to invest in Vion when the company needed money and could not get it from ZLTO. From a strategic perspective, the ownership of Vion shares by ZLTO is not essential, and financially, the organization has not benefited from it in recent years due to the lack of dividends.
In September, we will learn more when Vion's management opens the books and unveils its plans. Just as the financial state of our country is revealed on Budget Day in September, it is also high time to find out how things stand at Vion.
