13 August 2020 - 06:57
Solid recovery, supported by efficiency measures - despite challenging markets.
Highlights for first-half of 20201:
- Total Feed2 volume: -5.6% to 4.8 million tonnes; of which compound feed: -4.9% to 3.4 million tonnes;
- Gross profit: +2.5% to €219.5 million; compared to depressed H1 2019 (purchasing position) and due to improved product mix with focus on specialties;
- Underlying EBITDA3 : +34.6% to €48.2 million; rise in gross profit and cost savings due to efficiency measures taken;
- Underlying profit: +80.7% to €21.5 million;
- Working capital: (year-on-year) improved by €14.9 million to €76.5 million;
- Net cash flow from operating activities: almost tripled to €14.2 million.
1) Results for the first half of 2020 are compared to the results for the same period of 2019
2) ‘Total Feed’ covers the entire ForFarmers product portfolio and consists of compound feed, specialties, co-products (including DML products), seeds and other products (such as forage)
3) Operating profit excluding depreciation, amortisation and incidental items
Outlook for 2020
Despite expectations of a protracted impact from COVID-19 ForFarmers forecasts that underlying EBITDA and net profit in 2020 will comfortably exceed the weak result in 2019, partly as a result of the efficiency measures taken.
Commenting on the 2020 first-half results ForFarmers CEO Yoram Knoop said:
“Both for many of our customers and for us, the first half of 2020 was dominated by the global outbreak of the coronavirus and the nitrogen debate in the Netherlands. We are proud that our employees have managed to continue producing and transporting feed without any complications for our customers, despite the COVID-19 measures imposed. The closure of the out-of-home sector impacted on our customers’ sales, in particular in the second quarter. This was reflected in our volume development, especially in the United Kingdom and Poland.
In addition our customers are facing increased pressure to reduce the environmental impact of their business, with this being translated into various measures in the countries where we operate. Particularly in the Netherlands, where the agricultural sector is a global leader in terms of developing sustainable concepts, the discussion surrounding future government measures to reduce nitrogen emissions, is causing turmoil and uncertainty in the sector. In this light there is a growing need for data-backed advice; this is at the heart of our Total Feed approach.
The COVID situation has forced us to accelerate the implementation of our efficiency plans, meaning that our target of €10 million in cost savings has almost been reached already. Also as a result of this, we achieved a strong increase in underlying EBITDA despite the difficult market conditions, albeit in comparison to a weaker first half in 2019. This gives us confidence for the future. In addition we are working on next steps to make the organisation more efficient. We will announce the relating plans later this year.
There was a further increase in safety awareness at work, resulting in a 21% reduction in lost time incidents (LTIs). The knowledge, experience and dedication of staff is crucial to the successful rollout of any strategy. On 15 September we will publish our strategy for 2020-2025. With our employees, focus and Total Feed approach, we meet the key requirements to be successful in the challenging markets in which we operate,” said ForFarmers CEO Yoram Knoop.