Numico sees future in clinical nutrition

Related tags Baby food

Royal Numico, the Dutch baby food group, has announced it will
streamline its manufacturing process in an effort to generate cost
savings and focus its energies on clinical nutrition.

The company hopes the plan will generate annual net cost savings of €5 million by 2007, though it will lead to the closure of two gluten-free bakeries in the UK in the second half of 2005 and the loss of 125 jobs.

Numico​'s clinical nutrition products and clinical application systems (CAS) are currently manufactured at nine different sites using a multitude technologies. The firm will now aim to limit the number of technologies being used in each plant. As a result, the factory in Zoetermeer, the Netherlands will concentrate solely on the manufacturing of liquid nutrition, and the Liverpool, UK based plant will focus on producing disease-specific powder products and gluten-free breads.

Furthermore, the company said that "in line with its objective to focus on specialised nutrition, the manufacturing of generic and specialty CAS will be centralised in Wuxi, China and Châtel, Switzerland"​. This consolidation will lead to the sale of the CAS facility in Kampen, the Netherlands by the end of next year.

Numico plans to fund these changes through a restructuring provision of €2.5 mln, which will be accessed in the third quarter 2004.

Numico completed its purchase of Valio's baby food business last month, which it bought for €57 million in cash

This acquisition was Numico's first since selling off its supplement activities and reorganizing around infant and clinical nutrition and has given the company a market leading position in the infant milk formula and cereals categories in Finland, and reinforced its position in the Baltics.

"This is an example of our strategy to create leadership positions in selected markets through add-on acquisitions. We acquire two long-standing, successful brands which are poised to offer significant growth opportunities through their leading market positions,"​ said Jan Bennink, CEO of Numico.

The two brands are Tutteli, the leading name in Finland's infant milk formula category, and cereals category leader Muksu. In 2003, net turnover of the brands reached €20 million and operating income around €5 million.

A fifth of the revenues are generated through export to the Baltics. Acquisitions had been expected from Europe's largest maker of baby food since it sold the US supplement business GNC in November last year.

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