Neova and Kekkilä-BVB to start change negotiations and respective consultation processes aimed at improving profitability and renewing the operating model
The change negotiations and respective consultation processes are based on recent changes in the operating environment which have weakened Neova Group’s competitiveness. The Group’s objective is to improve profitability by continuing the efficiency programme launched in February 2023. This efficiency programme consists of contemplating various efficiency improvement measures, aimed at both cost savings and revenue growth. As part of the efficiency programme, consultation proceedings will be initiated in Neova Group regarding contemplated plans to improve operational efficiency by potentially restructuring the organisation, renewing processes and reducing personnel. According to a preliminary estimate, the possible change could lead to a reduction of up to 100 full-time positions in various countries. In Finland, the possible change is expected to lead to a maximum reduction of about 30 positions. In addition, contemplated changes could lead to other significant changes in roles and responsibilities of estimated 70 current positions globally. The number of employees in the scope of the negotiations and respective local processes is approximately 770 employees, of whom 210 are located in Finland. The Neova Group currently employs nearly 1,000 people, 380 of whom work in Finland.
During the last twelve months, consumer purchasing power, especially in Europe, has fallen significantly, driven by high inflation and increased interest rates. This has even had a negative impact on the demand for vegetables and soft fruit, for example. The decline in demand has been initially visible in retail stores, but it will eventually also be seen by professional growers, which were already struggling last winter with the increased energy costs. Both professional growers and retailers represent important customer segments for Neova Group’s subsidiary Kekkilä-BVB, which is the European leader in horticulture.
According to Vesa Tempakka, CEO of Neova and Kekkilä-BVB, demand in the growing media market has been declining for some time, and no immediate change is in sight. “We have been able to streamline our operations and increase our sales mainly through price increases, but we are now in a situation where volume decline cannot be compensated by other measures. To maintain our competitiveness and profitability, we need to consider adjusting our own cost level to match the market demand. We also need to aim to be more flexible and agile in responding more quickly to changing customer needs in different markets to succeed amidst the ever-tightening competition,” Tempakka says.
Plans to renew Kekkilä-BVB’s organisation
To secure its competitiveness in declining and changed markets, Kekkilä-BVB and its parent company Neova will initiate change negotiations and corresponding statutory processes in Finland, Sweden, the Netherlands, Germany, Spain, France, Estonia and Italy. The aim of the plans handled in the processes is to improve the efficiency of Kekkilä-BVB’s operations and competitiveness. According to a preliminary estimate, the possible change could lead to a reduction of up to 100 full-time positions in the various countries. In Finland, the possible change is expected to lead to a maximum reduction of about 30 full-time positions. In addition, contemplated changes could lead to other significant changes in roles and responsibilities of estimated 70 current positions globally. The number of employees in the scope of the negotiations and respective local processes is approximately 770 employees, of whom 210 are located in Finland. The Neova Group currently employs nearly 1,000 people, 380 of whom work in Finland.
Furthermore, planning will be initiated to assess an option to form a more independent Kekkilä-BVB with its own management and clear profit and loss responsibility. However, this is a separate matter from the plans being addressed in the change negotiations and other consultations that are commencing.
The planned change would affect all of Kekkilä-BVB’s businesses and functions. In addition, the possible change could have an impact on Neova’s Group Services and Supply Chain Management organisation. The change negotiations do not concern Kekkilä-BVB’s G&C Materials operations, Neova’s Fuels&Real Estate Development division, Peat Operations, nor Novactor or Neova Innovation team within the New Businesses division.
Savings target of EUR 30 million
Neova Group’s target is to reduce costs during 2023-2024 by approximately EUR 30 million, of which approximately EUR 20 million would consist of improving operational efficiency and EUR 10 million of potential reductions in personnel costs. The Group’s revenue in 2022 was approximately EUR 545 million, of which Kekkilä-BVB’s share was approximately EUR 368 million.
- Vesa Tempakka, Neova CEO, tel. +358 40 072 6727
- Jarmo Santala, Neova CFO, tel. +358 40 801 9191
- Ahti Martikainen, Director, Communications and Public Affairs, Neova, tel. +358 40 680 4723