29 Mar 2018 --- Dutch meat group Vion continued to improve its performance in 2017, resulting in a normalized EBITDA of €64 million versus €61 million in 2016. On the back of these solid operational results and its strong balance sheet, the company reinstates its dividend with a first payment based on the results of 2017 of €9.5 million (US$11.6 million).
Posting its financial results for 2017 the company says that net sales were up 7 percent to €5.1 billion (US$6.2 billion), while normalized EBITDA from ongoing operations increased 5 percent to €64 million (US$78.7 million).
There was a net profit of €22 million (US$27 million) versus €39 million (US$48 million) in 2016 as the result of €9 million (US$11 million) lower tax benefits and €13 million (US$16 million) higher restructuring and results on acquisitions and disposals.
Earlier this week Vion announced that Francis Kint will step down as CEO effective June 1, to become the CEO of a Belgian listed company.
A robust balance sheet with the solvency of 44.3 percent. Dividend reinstated with a first payment based on the results of 2017 of €9.5 million (US$11.6 million).
Revenues increased in 2017 with 6.5 percent, positively impacted by higher meat prices. Sales volumes slightly decreased in the company’s Pork division following the closure of its facility in Zeven, Germany, last April, while volumes in Vion’s Beef and Food Service divisions remained stable.
Normalized earnings before interest, taxes, depreciation and amortization (EBITDA) from ongoing activities increased by 4.9 percent to €64 million (US$78.7 million) in 2017 as a result of the ongoing execution of the strategy of performance improvement.
EBITDA in 2016 included a one-off €7 million (US$8.6 million) settlement received from the city of Ansbach. Excluding this settlement in 2016, EBITDA improved in 2017 by 18.5 percent compared to last year.
Earnings before interest and taxes (EBIT) showed a €6 million (US$7.3 million) decrease in spite of the €3 million (US$3.6 million) increase in normalized EBITDA, mainly because of €13 million (US$16 million) higher restructuring costs only partly offset by €6 million (US$7.3 million) higher income for acquisitions and disposals.
For 2017 Vion reported tax income of €4 million (US$4.9 million) following the recognition of net operating losses from prior years, compared to €13 million (US$16 million) in 2016.
Operating cash flow for the year amounts to €39 million (US$47.9 million) as the result of positive cash flow from operating activities of €35 million (US$43 million) and a decrease of working capital of €4 million (US$4.9 million).
In 2017 €79 million (US$97.2 million) was invested, mostly in maintaining, modernizing and expanding the production locations in all three divisions. Also, €22 million (US$27 million) was used for the acquisition of Otto Nocker and the acquisition of shares from minority shareholders in certain subsidiaries.
As a consequence, the net debt position of €18 million (US$22.1 million) at the end of 2016 increased to €51 million (US$62.7 million) at the end of 2017. Despite the large investments made during 2017, Vion’s solvency further improved to 44.3 percent.
At the end of 2017, Vion had total available liquidity of approximately €168 million (US$206 million), consisting of €21 million (US$25.8 million) in cash and cash equivalents and €147 million (US$180 million) available under the new working capital facility of total €200 million (US$246 million).
Following the improved results in recent years, Vion will, for the first time since 2012, pay out a dividend to its shareholders over the year 2017 of €187.07 (US$230.13) per issued share. Based on the number of outstanding shares, 50,784, this will result in a dividend of €9.5 million (US$11.6 million).
“In 2017 we have achieved a lot. We improved our operational results for the second year in a row, with normalized EBITDA now up to €64 million. At the same time, we continued our investment program to improve our production footprint,” said Francis Kint, CEO Vion.
“Our investments now total €260 million over the last four years, while maintaining our solvency ratio comfortably above 44 percent. Realizing that the meat industry is at the heart of the societal debate, we are actively engaged in stakeholder dialogues and proposing and implementing solutions.”
In March Vion’s Pork division introduced “Good Farming Balance,” a demand-driven approach, to better capture the opportunities in the international pork markets, bringing improved perspectives for Dutch pig farmers.
It was a success and more than 70 percent of the pigs purchased in the Netherlands are now contracted in one of Vion’s concepts (Good Farming Star, Good Farming Balance and De Groene Weg).
To answer to the consumers’ increasing demand for upscale products, Vion’s Beef division launched several families of products such as dry-aged, Simmenthal and regional origins, while the company’s Food Service division has continued to broaden its assortment with innovative concepts such as noodle sticks for the out-of-home segment.
Corporate social responsibility
The company’s first Corporate Social Responsibility (CSR) report, published last April, was well-received by stakeholders and was followed in the industry. In the second CSR report, Vion has widened the themes from the part of the value chain in which it is active to the entire chain.
The company has also connected its topics and related initiatives to the United Nations’ Sustainable Development Goals (SDGs) and has also introduced two major societal issues in the report: the environmental aspects of livestock farming and greenhouse gas emissions of the meat production chain.
Also, following the launch of a dedicated website of transparency in Germany, Vion expanded it in the Netherlands, through the launch in December 2017 of www.vion-transparantie.nl. On this website, Vion explains how it operates, publishes facts and data of audits and opens a forum for discussion with stakeholders.
Prospects for 2018
Vion describes 2018 as a “pivotal year” for the company because many initiatives taken in the last years will start to bear fruit.
While livestock prices have been increasing since the beginning of the year, this is so far not matched by increasing meat prices. Vion expects the societal debates around livestock farming and meat production to strengthen and increase the relevance of the themes that Vion has put on the table over the last three years.
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