MALMO, SWEDEN — AAK has announced it is considering closing its production site in Merksem, Belgium, a move the company said is in line with its strategy to optimize performance within the bakery segment to improve cost efficiency and increase competitiveness.
Acquired in 2014 as part of the acquisition of the oils and fats business of CSM Benelux NVAAK, the Merksem facility is predominantly a bakery fats plant, mainly producing margarines and shortenings for the industrial market in continental Europe. The proposed consolidation implies a transfer of production from Merksem to AAK’s sites in Hull, United Kingdom, and Zaandijk, The Netherlands, after which the site in Merksem would be closed. AAK employs approximately 100 at the Merksem plant.
“The proposed production consolidation would optimize our bakery segment in line with our portfolio strategy,” said Johan Westman, president and chief executive officer of AAK Group. “We will maintain our strong presence in the European industrial bakery market and continue to support our customers with the same high level of dedication and service.”
AAK said it plans to transfer production equipment and make additional investments in Hull and Zaandijk to accommodate potential additional volumes, if necessary.
If implemented, the restructuring is expected to cause non-recurring costs of €30 million ($35.6 million), for which a provision will be made in the second quarter. Approximately €20 million of this is a non-cash flow impact. AAK said the closing of the Merksem plant would lead to annual cost reductions and productivity gains of approximately €5 million.