Wessanen sees cereal turnaround

Related tags Cereal Profit

Dutch food group Wessanen is already seen the benefits of its
far-reaching restructuring programme Operation Phoenix with a
significant recovery in profits at its cereal products division,
Dailycer.

Although cereal sales for the year were 1.6 per cent lower than the previous at €223.8 million, mainly due to currency movements, the company said that it had benefited from a significant improvement in product mix, which helped profits rise from €10.2 million to €15.1 million over the same period.

The cereals division has been in the process of restructuring for some time, well before Operation Phoenix was launched last year across the company as a whole, and the main thrust has been to increase output of higher added-value products such as healthy flakes, bars and pillows - a move which is already paying off in terms of profit gains.

"Profitability improvement plans at the start of 2003 included changes in the product mix and the deliberate elimination of unprofitable products,"​ the company said in a statement this week.

"The turnaround was managed successfully, leading to a strong profit improvement; production efficiencies, purchase savings and reduction of overhead also contributed to the increase in EBITAE [earnings before interest, tax, amortisation and exceptional items]."

But there is yet more restructuring to come at the cereals arm, with the company announcing​ just last month that it was to close the Dailycer manufacturing unit in Telford, UK, and transfer production to other sites in the UK, France and the Netherlands.

At the time, the company said that consolidating Dailycer's manufacturing activities onto the three sites would improve competitiveness and increase the group's profitability, with the first benefits being seen as early as the end of 2004.

In October 2003, Wessanen announced that the Dutch production activities of Dailycer in Tilburg were to be integrated into the activities of Delicia, Wessanen's chocolate manufacturing business also based in Tilburg.

Related topics Markets

Related news