Annual results 2013

25 March 2014

ForFarmers books satisfactory results in year of consolidation and integration
Dividend 18.1% higher at € 0.136 per share


  • Turnover up by 29.5% to € 2.6 billion, with 26.5% of this from acquisition effects
  • Gross profit pressured by exchange rate effects and greater volatility of raw materials prices
  • Lower operating profit and profit after taxes, largely due to extra addition to provision for receivables
  • Integration of Hendrix and BOCM PAULS virtually complete
  • Financial position further strengthened
  • Sharpening of strategic focus and start made on building ’One ForFarmers’

Key figures

(€ x 1 million)     Pro forma
  2013 2012 20121
Turnover 2,625 2,026 2,564
Gross profit 387.5 310,6 400.9
Operating income 43.0 51.8 58,2
Result after taxes 31.1 37.2 39.2
Result after taxes from discontinued operations2 - 15.5  
Total result 31.1 52.7  

1 Based on the assumption that the acquisitions of Hendrix (NL: 2012) and BOCM PAULS (UK: 2012) were effectuated as per 1 January 2012.  
2 2012: Result from operations and proceeds from sale of Cefetra (57.7% stake) and Probroed (33.4% stake)

Yoram Knoop, CEO ForFarmers: “The year 2013 was for us largely dominated by the integration of Hendrix and BOCM PAULS. Underlying turnover and results proved to be relatively robust and were in line with expectations, despite the challenging market conditions. We further strengthened our financial position, partly due to more effective working capital management and the proceeds from the sale of Cefetra. The steps we took last year have put us in a solid position to start really building on ‘One ForFarmers’. This will require further internationalisation and increases in scale, in combination with our focus on operational excellence, which together will enable us to offer our clients the very best price/value ratio and to continue investing in know-how and innovation.

The ongoing professionalisation and increases in scale in the agrarian business sector, the increasing complexity of the legislative and regulatory environment and social issues such as food safety, sustainable business and environment and animal friendly production are creating an ever increasing demand for higher feed efficiency, specialist know-how and more client-specific animal nutrition solutions. Due to our strong international market position in compound feed and our total feed to farm concept, we are able to respond in a highly focused manner to these changing client needs. Our strategic roadmap ‘Route 16’ shows the direction we want to move in. We have already realised some of our goals and we now want to look further into the future than 2016. In 2014, we have made a start on sharpening the focus of our strategy and we will be investing in making our organisation more effective and more agile. More uniform working methods will enable us to improve the fulfilment of our client proposition.”

Dividend proposal
It will be proposed to the Annual General Meeting to pay out 50% (2012: 30%) of the net profit, corrected for one-off income (such as book profits and taking into account taxes), of € 28.8 million, or € 0.136 (2012: € 0.115) per share, as dividend. This proposal is in line with adjustment of the dividend policy approved in November 2013 and corresponds with an amount of € 14.4 million (2012: € 12.2 million).

Turnover and profit
ForFarmers recorded turnover of € 2,625 million in the full year 2013, an increase of 29.5% compared with 2012. Consolidation effects accounted for 26.5% of this increase, as a result of the acquisition of Hendrix (NL, B, Ger) and BOCM PAULS (UK), which were consolidated in the 2012 results for nine and six months respectively.  Compared with the pro forma 2012 results, turnover was up by 2.4%. The increase in turnover (in local currency terms) was particularly strong in the UK, with a rise of 15.3%. Germany and Belgium booked a slight dip in turnover last year. Turnover from organic compound feed is still modest, but increased in 2013.

Turnover per country

(€ x 1 million)     Pro forma
  2013 2012 20121
The Netherlands 1,053 910 1,048
Germany 577 545 587
Belgium 237 191 245
United Kingdom 727 360 656
Other countries 31 20 28
Total 2,625 2,026 2,564

1 Based on the assumption that the acquisitions of Hendrix (NL: 2012) and BOCM PAULS (UK: 2012) were effective as per 1 January 2012. 

The volume of compound feed sold increased 30.7% to 6.4 million tonnes in 2013. This was due to a particularly strong organic increase in the sales volumes of compound feed in the United Kingdom, and a more modest increase in Belgium, while compound feed sales volumes were down in the Netherlands and Germany. Volumes were up 2.2% compared with the pro forma 2012 results.

The first full year contribution of Hendrix and BOCM PAULS and the strong organic contribution from the UK operations had a positive impact on gross profit. Gross profit rose by 24.8% to € 387.5 million. Gross profit fell by € 13.4 million compared with the pro forma 2012 results. At constant rates, this drop came in at € 7.5 million. The decrease in gross profit was due to the greater volatility of raw materials prices during the year under review and compared with the previous year, which pressured margins, especially in Belgium and Germany.

Result after taxes fell to € 31.1 million from € 37.2 million in 2012. The decline in result after taxes came in at € 8.1 million when compared with the pro forma 2012 results. This drop was due to the lower gross profit, which was partly offset by structural cost savings and synergy effects in the production and logistics processes and at the staff departments, as a result of the acquisitions made in 2012. Operating expenses did nonetheless increase fractionally compared with the pro forma 2012 results on account of one-off charges and temporary effects and came in at € 351.5 million. At constant rates, this rise amounted to € 5.6 million, or an increase of 1.7%.

Operating expenses for 2013 were negatively impacted by an extra addition of a total of € 9.0 million to the provision for receivables (related to two large clients) and redundancy expenses related to the integration of acquisitions. In addition, the implementation of the production master plan led to a temporary increase in transport costs. Depreciations were higher in 2013, due to an impairment of €2.1 million taken on fixed assets that are no longer of operational use.  

Total result (after taxes) came in at € 31.1 million, compared with € 52.7 million in 2012. The 2012 results included a profit from discontinued activities of € 15.5 million, related to Cefetra and Probroed.

Capital structure and solvency
Thanks to the addition of the retained 2013 profit, solvency increased to 44.2% at year-end 2013, from 40.1% at year-end 2012. 

The operational cash flow came in at € 55.4 million in 2013 (2012: € 48.2 million). This increase was largely due to improvements in working capital.

ForFarmers made total investments of €29.1 million in 2013 (2012: €23.4 million), making investments higher than depreciations (€ 18.9 million). ForFarmers’ production facilities have sufficient capacity to meet market demand. In the year under review, ForFarmers’ investments included the implementation of new IT systems related to the integration of ForFarmers and Hendrix. All ForFarmers facilities in continental Europe, including Hendrix, now operate on a single integrated SAP system. The company’s investments also included the regular replacement of production and transport equipment and the refitting of its production facilities in line with the requirements of the production master plan. This included the conversion of the former Hendrix plant in Lochem into a specialised production facility for organic compound feed with extra capacity, to enable ForFarmers to respond more effectively to the increasing demand for organic food.

Current assets increased by € 65.9 million, largely due to the receipt of the final part of the proceeds from the sale of Cefetra and Probroed in 2012.

Given ForFarmers’ strong balance sheet and its healthy liquidity, the company is in a good position to execute and sharpen the focus of its current strategic roadmap ‘Route 16’.

Post balance sheet date events
On 3 February 2014, ForFarmers announced it was acquiring 100% of the share capital of HST Feeds Ltd (UK). HST Feeds is based in Crewe (Cheshire) and sells around 140,000 tonnes of cattle feed and poultry compound feed in the North-West of England. HST Feeds operates according to the principle of operational excellence and the delivery of innovative solutions and feed programmes with added value for its clients. The acquisition price is based on an enterprise value of € 15 million, including liquid assets. HST Feeds will operate as part of the ForFarmers Business Unit BOCM PAULS.

Sharpening of strategic focus and spearheads 2014
In the years ahead, there will be a continuation of the professionalisation and increases of scale among ForFarmers clients (agrarian entrepreneurs) right across the EU, in response to the persistent pressure on the margins for their products. This pressure is the result of the increased purchasing power of large food retailers, the complexity of the  legislative and regulatory environment and the related focus on food safety, sustainable business, the environment and animal welfare.

This has led to a structural shift in client demand. ForFarmers wants to use its market-leading position in compound feed and its ‘total feed to farm’ concept to respond to the growing demand from clients for increased feed efficiency. The company wants to do this in combination with specialised know-how and advice on the best animal nutrition solutions taking into account their clients’ individual situation and entrepreneurial goals. The realisation of this client proposition will require extra innovative potential and production development, which in turn can give an extra boost to sales of specialties and support programmes. This will require increases in scale, international growth through acquisitions and a constant focus on operational excellence, which will enable us to offer clients the best price/value ratio and higher, more predictable returns.

With this objective in mind, the current strategic roadmap ‘Route 16: The way we work‘ defines an overall approach that lays down the route to the goals for 2016 and how ForFarmers wants to achieve that together with its staff. Some of these goals have already been reached over the past year and to retain the desired long-term perspective as a company, this year a start has been made with regard to sharpening the focus of the ForFarmers’ growth strategy, set against a new, longer-term (targets) horizon.

The progress made in 2013 has put us in an excellent position to really start building on ‘One ForFarmers’. This is primarily about intensifying cooperation within the group, more uniform working methods and a conscious application of existing know-how to market certain products and innovations in local markets. To help achieve this, in 2014 the company will invest in making its organisation more effective and more agile. The executive leadership team will be expanded to nine members from the current six, to develop group-wide functional responsibilities in addition to the existing Business Unit responsibilities. The company will also be bolstering its organisation on fronts such as marketing & innovation, purchasing & policy formulation, operations & supply chain and human resources. Purchasing processes and purchasing conditions will be centralised, standardised and tightened. Human resources policies also need continued development across the group. ForFarmers plans to expand the internationally-operating innovation team, which will increase its focus on forging and expanding strategic alliances with partners and joint ventures with universities and research institutes. On the sustainable business front, the company will be adopting a more integrated and structured sustainability policy to obtain the desired leading position on this front in the years ahead.

(Market)outlook 2014
In 2014, it is anticipated that clients will be again confronted with a highly competitive market. In this respect, the beef cattle sector in general and the pig farming sector in the United Kingdom are in a stronger position. For the 2014 financial year, a continuation of the high volatility in raw materials prices is expected, which will have an impact on the margins of clients and ForFarmers.

Download the annual report 2013