ForFarmers third quarter 2018 Trading Update

1 November 2018

Highlights third quarter 20181:

  • Volume Total Feed2: growth; increase in the clusters Germany/Belgium/Poland and the United Kingdom, decrease in cluster the Netherlands
  • Gross profit: growth in all clusters
  • Underlying EBITDA3: marked decrease; increase in the clusters Germany/Belgium/Poland and the United Kingdom, decrease in the Netherlands
  • Tasomix (Poland) consolidated as of 1 July in cluster Germany/Belgium/Poland; Maatman consolidated as of 3 September in cluster the Netherlands

Underlying EBITDA in the third quarter 2018 was mainly negatively impacted by rising raw material and energy prices and positively by the consolidation of acquisitions. The extreme summer weather in July and August led to deteriorating expectations of harvests and consequently to rapidly and unexpected rising raw material prices. Especially ForFarmers the Netherlands and Tasomix could not fully pass on the effects of the hike in raw material prices to customers. Moreover, the drought led to low water levels in the rivers. More vessels and bulk tankers were needed for the transport of raw materials. This resulted in higher inbound logistics costs, particularly in the Netherlands.

‘We are satisfied with our strengthened market position in the poultry sector following the acquisitions of Tasomix and Maatman. In addition, the like-for-like development of gross profit particularly in Germany, Belgium and the United Kingdom was positive. The improvement of the results in the clusters Germany/Belgium/Poland and the United Kingdom could not offset the decline thereof, particularly compared to the strong third quarter 2017, in the Netherlands. The integration of the four acquired4 activities will continue to lead to extra costs in the coming months which cannot yet be offset by synergy effects. Not having been able to fully pass on the rising raw material and energy costs in the Netherlands and Poland, also negatively impacts on the development of the result of this year. Finally, the recent break-out of African swine fever in the wild boar herd in Belgium is concerning for the pig sector. We have implemented the necessary hygiene protocols and are following the developments closely’ states Yoram Knoop, CEO of ForFarmers.

1. Results and developments of the third quarter 2018 are compared to those of the third quarter 2017, unless stated differently
2. Total Feed covers the entire ForFarmers product portfolio and comprises compound feed, specialties, co-products (from the feed industry, referred to as DML products), seeds and other products (such as forage)
3. Underlying EBITDA means EBITDA excluding incidental items
4. The acquisitions in Q3 are Tasomix (Poland) and Maatman (the Netherlands), and in Q4 Voeders Algoet (Belgium) and Van Gorp Biologische Voeders (the Netherlands, Belgium)