ForFarmers 2021 first-half results

13 August 2021 - 06:56

Financial highlights for first-half of 20211:

  • Total Feed2 Volume: +1.9% to 4.9 million tonnes; acquisition effect outweighs slight like-for-like (l-f-l) decline
    of which compound feed: +2.2% to 3.5 million tonnes; growth (l-f-l) in cluster Germany/Poland and acquisition effect compensates for decline (l-f-l) in cluster Netherlands/Belgium and United Kingdom
  • Gross profit: -0.9% to €217.5 million as a result of increased competition due to Covid and volume decline (l-f-l)
  • Underlying EBITDA: -15.4% to €40.8 million despite contribution from acquisitions due to lower gross profit and higher energy and fuel costs; no currency translation effect
  • Underlying net profit3: -26.6% to €17.9 million
  • Working capital: (year-on-year) improvement by €23.2 million to €53.3 million
  • Cash flow from operating activities: -35.9% to €9.1 million; driven by lower EBITDA

Commenting on the 2021 first-half results, ForFarmers CEO Yoram Knoop said:

“The results in the first-half of 2021 were disappointing. There was an abnormally fierce battle for market share between feed producers, resulting in margin pressure. This was mainly attributable to the generally dire liquidity situation of our customers. The prolonged Covid measures delayed price recovery for their products, whilst at the same time feed prices rose as a result of the sharp increase in raw material prices.
In addition, we lost around €4 million in our underlying EBITDA due to the incident in Germany where we had priced a number of contracts wrongly, as reported in our Q1 trading update. Our volumes increased as a result of the acquisition of De Hoop Mengvoeders and Mühldorfer Pferdefutter, both at the beginning of this year. Like-for-like, we saw volumes decline just a little. In the first half of this year we realised savings, as part of the efficiency programme to save a total of €7 million during this and the coming year. Mainly due to margin pressure and the incident in Germany we realised a lower underlying EBITDA than a year earlier. How long the current margin pressure will continue, largely depends on the diligence of the sector in fully passing on the rapidly increased costs of mainly raw materials and energy, to customers. Against this backdrop, we expect the underlying EBITDA in the second half-year 2021 (including acquisitions) to be more or less in line with the underlying EBITDA in 2H 2020.
The integration of the two acquisitions is progressing according to plan and the results achieved so far have been better than expected. Within ForFarmers we focus foremost on increasing our market share by delivering good products and advice for a fair price, enabling both our customers and ourselves to increase returns. We aim to do this more efficiently all the time. We are due to launch innovations, which will enhance our customer proposition.
Our sector has great innovative strength and at present this is crucial in the Netherlands in particular, given that it provides the solution to the nitrogen crisis. By making it possible for the sector to innovate in terms of feed concepts and barn facilities, it is no longer necessary to focus on reducing livestock numbers in order to restore nature and kick-start the construction sector. It is by preserving – and not destroying – our world-leading sector, in terms of high-quality production with an ever lower environmental footprint, that we can contribute to greater global sustainability.
Finally, I am pleased that the Supervisory Board nominated our colleague Pieter Wolleswinkel as a member of the Executive Board this morning.”

Results are always compared year-on-year
Total Feed : the entire product portfolio, comprising compound feed, specialties, co-products (including DML products), seeds and other products (such as forage)
Underlying net profit: in this instance profit attributable to shareholders of the Company