Meat processor Vion seeks investors to fund recovery, tap Chinese market

AMSTERDAM, July 10 Thu Jul 10, 2014 10:21am EDT

AMSTERDAM, July 10 (Reuters) - Europe's second-largest pork producer Vion is looking for investors and strategic tie-ups in China in a restructuring that will close factories in Europe and seek markets in Asia and Africa, its CEO said.

In an interview with Reuters, new chief executive Michiel Herkemij said the restructuring programme, which aims to return the cooperatively-owned meat processor to profit, would cost around 150 million euros ($205 million), two-thirds of which would come from cutting costs.

He said he was open-minded about the source of external financing, which could be strategic investors, bond sales, share issues or bank loans.

The meat processor's owner, Dutch farmers' cooperative ZLTO, said it had no current plans to sell a stake in the company.

"The question is not on the agenda," a spokesman said.

Vion, which depends on exports for 80 percent of its annual turnover of 6 billion euros, last year reported a cash outflow of 1.4 billion euros and an operating loss of 139 million euros.

It plans to shut up to 10 factories in Germany and retool remaining sites to make higher-margin produce such as ready meals.

It has already sold seven factories in Germany and closed another four since Herkemij joined in January. The company did not say how many jobs would be affected.

"Meat processing already moves you a bit up the value chain, but if you go into ready-made meals - that's the route we'd like to take," Herkemij said.

The company has 40 factories in the Netherlands and Germany and exports to 70 countries. Herkemij said it could be turned round by consolidating manufacturing and cutting costs, but the longer-term goal was to refocus exports towards fast-growing economies in Asia and Africa.

Herkemij, who spent four years running Dutch dairy cooperative Friesland Campina's operations in China, said expansion there required a local partner.

"It's very important to forge alliances with parties who are also operating in Asia and Africa. While I was working there I learned that if you really want to open these markets up, you need to have a strategic alliance," he said. ($1 = 0.7331 Euros) (Reporting by Thomas Escritt; Editing by Ruth Pitchford)