VION to Strengthen its Food Activities

Strategic vision of “Balancing the Future” reconfirmed. The strategic action plan for VION Food's three home markets – Germany, the Netherlands and the United Kingdom – is aimed at working more effectively and more efficiently. The objective is to further enhance the company’s productivity and product quality, while lowering costs.

18 Jun 2012 --- Food producer VION Food Group has gone through an intensive review of its long-term strategic vision of “Balancing the Future” in recent months. This was triggered by the disappointing results delivered by VION in 2011, and the economic prospects for the years to come. This review has resulted in the strategic vision being reconfirmed, and the decision being taken to bring forward planned changes and investments.

In 2011, the strategy and activities of VION Ingredients delivered satisfactory results. The strategy of adding value and of making the processing of raw materials more sustainable was achieved. VION Ingredients will continue to focus on further optimising its production, and integrating recently acquired companies, including Eastman Kodak in the US.

The strategic action plan for VION Food's three home markets – Germany, the Netherlands and the United Kingdom – is aimed at working more effectively and more efficiently. The objective is to further enhance the company’s productivity and product quality, while lowering costs. Most measures and changes to the organisations in the Netherlands and Germany have now been identified.

VION is going to implement these measures at an accelerated pace, which will differ from country to country and from market to market. Initiatives will be tailor-made, with attention being given to local, regional and national circumstances. As a part of the action plan, products in the overall range that do not sufficiently match the strategy will be discontinued. These measures will not be without job cuts, both as a result of plants being closed and changes to back-office activities. In line with VION's Corporate Social Responsibility agenda, the action plan will result in fewer transport movements and better animal welfare.

CEO and Chairman of the Board Uwe Tillmann: “The starting points of our strategic vision have been reconfirmed. Achieving sustainable partnership relationships with strategic customers continues to be of prime importance, both now and in the future. We continue to invest in these partnerships, as well as in product quality and effectiveness. The right balance and choices will determine our future success. We are further optimizing our production, logistics, ICT and sales, thus also reducing costs. Unfortunately, this will not be possible without streamlining certain activities and making some redundancies. In the interest of our customers, our suppliers, and our employees, we will now, more than ever, be committed to added value and our credo Passion for Better Food”.

VION Food Netherlands is going to concentrate its pork activities. The activities of VION Druten will cease and will transfer to VION Boxtel and VION Groenlo. Retail production will largely be concentrated at VION Retail Groenlo. Due to market developments, changes will be made to Encebe Vleeswaren’s production, range, and organisation. The overcapacity of logistics service provider Distrifresh Boxtel will be addressed. Indirect support departments will also be brought in line with the new production organisation. Together, all intended changes and investments are expected to affect employment for some 340 permanent staff. VION will look to relocate some of these employees. The Group Works Council of VION Food Netherlands has already been asked for its input.

VION Food Germany is making changes to its structure to concentrate its activities. This will considerably lower the costs of support departments. By the end of 2012, employment will be discontinued for more than 290 employees, some 125 of whom work in support departments. Talks have already been held with most employees concerned. The remaining meetings will take place within the next two to three weeks. VION is also going to look at opportunities to relocate employees, taking into consideration their individual situations. In addition, VION Food Germany will optimize its product portfolio and the company will further concentrate on attractive markets and cost reductions. The changes to the production processes and the product portfolio have necessitated a reduction in the number of indirect and production employees at VION Wunstorf. As a result of the pig slaughtering activities being relocated to other sites and the product portfolio being decreased, the number of employees at VION Hilden will also have to be reduced.

VION say that their Food UK business requires more time and attention to carefully analyse the strategic options than was the case in the Netherlands and Germany. This analysis is currently been worked on in some detail.