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Vion Food Restructures

16 July 2014

EU - As part of a new strategy, Vion Food Group is to focus on cost reduction and investment in its operating sites.

The aim is to help more sustainable production.

Cost reduction is expected to be achieved by better cooperation between the various locations, a coordinated approach to purchasing, and a more efficient supply chain.

Vion said that part of the move to reduce costs could see the closure of a number of plants in Germany.

Michiel Herkemij, CEO of Vion: ‘We have gone through a turbulent period, and it is necessary to thoroughly reorganise the company.

“Because of the actions already taken, Vion is, at this moment, financially stable again and our debts have been eradicated.

“We have built a strong foundation for the future, and dare to look forward again, and focus on the future. The main aim is to restore the company to profitability.”

Vion said that currently, five of the six business units are doing well, without Dutch pig slaughterhouses and related chain activities requiring improvements.

Mr Herkemij: said: “In the next two years we will invest an additional €100 to €150 million. We can finance part of these investments through cost reductions, but in order to speed up the process of improvements, we are also investigating the possibilities of bank financing.’

The company will look to intensify exports to Asia and start exports to Africa.

It said it intends to implement a closed chain with retailers and farmers and introduce the Vion quality standard as the sector standard

The company aims to reduce costs by €100 million over the next two years and achieve a good balance between fresh products and added value products.

As part of the first step in the new strategy, Vion has decided to contract proQure to support Vion in the process of reducing the cost of non-food purchases.

The purchase specialists at ProQure will support Vion in negotiating and purchasing in a more efficient and structured manner.

Jacques Straathof, CFO Vion: "To regain trust from our clients and the markets, we plan to invest an additional €100 to €150 million. We can finance part of these investments through more efficient non-food purchasing."

Vion Food spends on average 11 per cent of sales on purchasing non-food items to support its business operations.

This includes purchasing energy, logistics, hiring of external staff, packaging materials, catering and cleaning. Vion has identified substantial opportunities to save costs for purchases of non-food products and services.

To achieve these savings, Vion is going to re-structure its non-food purchases operations. The Dutch and German teams will merge, allowing the business to take advantage of the economies of scale of our organisation.

As an example of the benefits of a unified approach, by purchasing as one, Vion has achieved an annual cost saving of €2.5 million in sea freight to Asia.

TheCattleSite News Desk

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