ForFarmers N.V. 2019 results

12 March 2020 - 06:58

Key parameters of results 2019:

  • Total Feed volume: up 0.7% to 10.1 million tonnes; but like-for-like decline (-2.9%), especially in H2-2019 (-4.0%)
  • Compound feed volume: up 1.9% to 7.1 million tonnes; but like-for-like decline (-3.2%), especially in H2-2019 (-3.9%)
  • Gross profit: down 0.6% to €440.7 million; despite further volume decline, recovery in H2-2019 compared to H1-2019 (H1: impact of unfavourable purchasing position and also volume decline)
  • Underlying EBITDA: down 11.6% to €88.5 million; including positive IFRS 16 effect (€5.8 million); recovery in H2-2019 compared to H1-2019 despite volume decline
  • Underlying earnings per share: down 36.2% to €0.37
  • Net profit: down by 69.8% to €17.7 million, due to, a.o., goodwill impairment United Kingdom (€25.6 million)
  • Dividend proposal: total of €0.28 per ordinary share (regular dividend of €0.19 and a special dividend of €0.09)
  • Working capital: improved by 36.2% to €48.7 million due to operational improvements
  • Net cash flow from operating activities: up 17.1% to €96 million

Yoram Knoop, CEO ForFarmers, about the 2019 results:
2019 was a difficult and turbulent year for us. We were faced with the consequences of an unfavourable purchasing position as a result of which the first-half 2019 result was severely put under pressure. We have since further tightened our purchasing procedure in order to minimise the chance of such a risk recurring. In the second half of 2019, we realised better results despite further like-for-like volume decline due to challenging market circumstances in all countries except for Poland. This was, among other things, due to the implementation of our efficiency plans, which included the closure of five mills. We are well on track with the realisation of the earlier announced €10 million cost saving in 2021 (compared to 2018).

The integration of the four companies which we acquired in 2018 has been completed. Our market positions have been strengthened through these acquisitions. We are pleased Tasomix's volumes are increasing in the growth market Poland. Consequently, our market share in the growing European poultry sector is expanding. Volume development in the United Kingdom is slower than anticipated, which is why a goodwill impairment was required. Finally, we have improved our operational cash flow through our continuous focus on working capital. In addition, we are pleased to have significantly reduced the LTIs (lost time incidents).    

A new reality as base for determining the strategy for 2025
We see market circumstances in which we operate changing rapidly. This is mainly the case in our home market the Netherlands where, as of the second half of 2019 the political debate about the necessity to reduce nitrogen emissions, is creating an uncertain outlook for livestock farming. Although the government declared that it was not a goal in itself to reduce livestock numbers, it has become clear that the proposed measures will in due course definitely lead to a small decline in animal numbers. As ForFarmers we support the Agricultural Collective, the group that discusses the necessary measures with the Ministry of Agriculture, Nature and Food quality, such as adjustments in feed and technical innovations in barns. This is in line with our mission ‘For the Future of Farming’ through which we focus on a future proof, sustainable livestock farming industry. A livestock industry with strong and healthy farming businesses, paying attention to animal health and welfare and to the impact of the sector on nature and environment. With our Total Feed approach - innovative feed concepts, advice and digital tools - we help farmers improve their returns on-farm efficiently and responsibly. Knowledge and innovation are crucial in this respect. Partly due to our scale we can train our advisors in internal academies where they can share knowledge, which can subsequently be deployed on-farm. Wherever possible we use residual flows (co-products), from the food industry and not suitable for direct human consumption, in the formulation of our feeds.
Apart from changing market circumstances we are also facing animal diseases which are having a large impact on the sector for already some time and are a concern for the livestock farming industry. African swine fever has resulted in more export of pig meat and poultry products to China and a sharp rise in pig prices. In the meantime however, the illness has also been detected among wild boars in regions including Poland and close to the German border. Poultry farmers are also on the alert because the contagious version of avian flu has been detected among wild birds in Poland. We are monitoring this closely. During past years important steps have been made in determining hygiene protocols and in collaboration in the sector to combat spreading of animal diseases.

These are turbulent times and a new market reality is appearing rapidly. By implementing strategy Horizon 2020 in the past years, we have positioned ourselves stronger in four countries and made a successful start in the growth market Poland as fifth country of operation. Our market positions and our scale form a solid base from which we can continue to create value for our stakeholders in the current new reality. We will be announcing the strategy for the years 2020 -2025 on 12 May 2020.