Why delayed annual results do Vion no favours

In recent years, Vion has always announced its annual figures in the last week of March, but they have now deviated from that tradition without giving reasons. This was not a last-minute decision and was announced in February by a press spokesperson upon request. It is currently unknown when the figures will be published. Normally such a delayed publication is not immediately a problem, but in the case of Vion this is a sensitive matter.

Big loss in 2021
Vion performs structurally poorly compared to the competition. Last year the sector was shocked with a loss of no less than €29 million. This was a major setback, because in previous years the meat company seemed to have recovered from the leak. German competitor Westfleisch also made a significant loss of millions in 2021, but was able to recover last year green numbers present. This is thanks to a strong austerity program. Vion chose a different route. After the loss of millions in 2021, CEO Ronald Lotgerink said that he wanted to stick to the strategy that was implemented to create added value in the chains. "If things don't go well, you shouldn't immediately throw the strategy overboard," was his thought.

There is something to be said for this determination, but the results should not remain bad. It remains to be seen whether this is actually the case. However, looking at the challenging market conditions in 2022, it is obvious that Vion has once again had a difficult year. High costs were already the bottleneck in 2021 and this situation has probably become even more difficult due to high inflation. In addition, pork sales in China have not been profitable for some time and the German branch is struggling with structural overcapacity, which means that fixed costs can be spread over fewer slaughter hooks. This forces the meat company to divest by closing various slaughter and deboning locations. 

In addition, purchasing prices (both beef and pork) have risen to great heights. Although meat prices have also made significant steps, it is obvious that this has been at the expense of margins, as slaughterhouses also loudly claim. Already several times Vion decided to increase the pig price in the Netherlands with retroactive effect. This indicates that determining the pork price is walking a fine line. On the one hand, the slaughterhouse wants to mutate on a budget, but at the same time the purchasing price must remain competitive to be assured of sufficient supply. 

Wipe sign
The sum of all these factors was probably the reason for credit insurer Euler Hermes (which is part of Allianz Trade) to reduce its exposure to the slaughter group. to return to zero. Vion downplayed this decision and says that the effect is not great. This is because the exposure of the credit insurer in question is small. That may indeed be the case, but the measure is a bad sign. It creates uncertainty and that is a fertile ground for sometimes wild rumors. After the collapse of Gosschalk, Vion is next, it is suggested in the sector. By the way, no one has any interest in this. After all, pig sales in the Netherlands will then be completely disrupted.

The concerns about a possible bankruptcy of Vion seem exaggerated. Vion's solvency fell from 46% to 39,9% last year. Despite the sharp decline, this is a solid percentage. A solvency percentage between 25% and 40% is generally considered healthy. Vion has weathered so many storms in the past that the roots of the company are used to some blows. Vion currently strongly denies that there are any liquidity problems and says it uses stable payments. Without being able to look at the figures, suppliers have to take the slaughterhouse at its word. Opening the books could clear up doubts. That is, if the results for 2022 are better than expected. For the time being, appearances are against Vion.