Wessanen to Restructure European and Frozen Food Activities, 300 Job Cuts Revealed

After implementation during 2013, the planned transformation is expected to generate cost savings in the order of €15 million per annum from 2014 onwards. It will impact approximately 300 full time equivalents (FTE) in Europe.

29 Nov 2012 --- Royal Wessanen nv has announced plans to reorganise its European and Frozen Foods activities. As first announced in July, Wessanen has been assessing the company's structure and cost base on a more structural basis. After implementation during 2013, the planned transformation is expected to generate cost savings in the order of €15 million per annum from 2014 onwards. It will impact approximately 300 full time equivalents (FTE) in Europe. Consultation with the European and local works councils will start immediately.

The one-off costs associated with its implementation are estimated to be €24 million, of which €15 million have a cash effect over the next twelve months.

Piet Hein Merckens (CEO) comments: " In the past period, we have spent a considerable amount of time assessing business opportunities and issues. We have also thoroughly looked at our structure and cost base with the aim to deliver more efficiently our strategic agenda and adapt to a changed environment. As a result, we are initiating a wide range of actions to increase focus, substantially reduce complexity and simplify and standardise processes. In addition, we are also addressing low-yielding and non-performing activities.

This all will result in a substantial reduction of our workforce. I am fully aware of the consequences this announcement will have for many of our colleagues and I am grateful for their considerable contributions in building our businesses. The current performance and changed size of business however require us to take action to strengthen our position in the longer term interests of our stakeholders."

Within the core Wessanen Europe, we are to build a better integrated European organisation in order to make our organic brands most desired in Europe. We will transform into an organisation which will be marketing-led and with corner stones to leverage our scale in innovation and category alignment through Category Brand Teams, central sourcing, manufacturing, quality and ICT. To further improve our performance, we will create more focus on our activities in the countries, reduce complexity and simplify processes. As part of this reorganisation, we are reducing the size of our fixed overheads in line with the reduced size of the group following numerous divestments.

As a result, a reduction of approximately 190 full time equivalents across our businesses, including at corporate headquarters, will be realised. Total costs associated with the headcount reduction are likely to amount to €10 million and result in savings of €10 million per annum commencing 2014. Further savings are to be expected from additional operational improvement initiatives.

At Frozen Foods, the Beckers and Favory organisations will become one integrated company with the aim to strengthen its Benelux market positions, improve profitability and enable it to better cope with the challenging environment. This integration will affect the marketing & sales, operations, finance and human resources departments. As part of the plan, the Favory snacks plant in Deurne will be closed in March 2013.

These measures will affect approximately 110 full time equivalents and result in cost savings of €5 million per annum as of the second half of 2013. The associated costs will reach approximately €14 million, of which a €9 million non-cash impairment of fixed assets of the Deurne plant and €5 million of reorganisation costs, primarily redundancies.