3 November 2023 - 07:04
“The results in the third quarter show a recovery of underlying EBITDA. Sales volumes did decline compared to last year in the third quarter, but were roughly equal to the second quarter of this year.
The new way of working, in which local organisations are active in the market with various products and specific advice, is bearing fruit. It underpins our confidence in the more positive result development for the second half of the year, as stated in our first half-year press release.
We received permission to sell the compound feed activities in Belgium and closed this transaction in October. We also hope to be able to close the already announced acquisition of Piast in Poland soon. This strengthens the basis for our further development.
Delivering good feed at a competitive price is key to our approach. We have proven this by being able to offer our customers competitive feed prices. This has increasingly led to a stronger market position. Together with farmers we are working at making food production more sustainable. We are doing this very cost-consciously, especially now that the affordability of food is becoming increasingly relevant. I notice among our employees that they want and can make a difference in this. This makes us proud and gives us confidence for the future”, says Pieter Wolleswinkel, CEO of ForFarmers.
Market developments in third quarter 2023
Average prices in Europe for meat and eggs were higher in the third quarter of 2023 than a year before. They were also higher than in the United States, Brazil, and Canada, thus impacting export from Europe. As of the beginning of this year milk prices in Europe have started to drop. Dairy farmers received substantially less for their milk in the third quarter of 2023 than a year earlier. Prices for raw materials and energy were also much lower than in the third quarter of 2022. At that time, the war in Ukraine threatened to create a major shortage of raw materials and energy, causing prices to rise significantly. Given geopolitical developments concerns remain about the availability of raw materials and consequently the price development of raw materials as well as energy and diesel prices remain volatile.
Development consolidated results ForFarmers in the third quarter 20231:
- Total volumes (incl. co-products & others): -6.2%
of which compound feed: -5.7%
- Gross profit: +4.3%
- Underlying EBITDA: +33.6%
1. Results and developments of the third quarter 2023 are compared to those of the third quarter 2022, unless stated differently.
Compared to the third quarter 2022, volumes were lower for all species. Less feed was sold in the ruminant sector due to the steadily declining milk prices since the beginning of this year, combined with good weather conditions. At the same time, the market specific approach led to winning new customers regionally. In certain regions, some dairy farmers and pig farmers decided to stop farming following policy decisions. This is one of the reasons why the number of animals in the pig sector is at an all-time low. Volumes in this sector remained fairly stable however, when compared to volumes in both the first and the second quarter of 2023. Slightly less feed was sold in the poultry sector than a year earlier. This was due to both the transition to Better Life welfare concepts in the Netherlands and to stopping the feed production in Belgium for this sector. At the same time, feed volumes in Poland increased.
Net revenues decreased versus a year earlier, driven by lower raw material prices and lower volumes. Gross profit grew on the back of a better product mix and the specific local approach. Underlying total operating expenses were roughly stable. Energy costs were lower than last year when they were extremely high as a result of the war in Ukraine. Although there were less employees (in ftes) than last year, personnel costs were higher due to the collective labour agreement increases at the beginning of 2023. Underlying EBITDA increased by 33.6%.
Interim CFO
The Supervisory Board has appointed Hans Kerkhoven as interim CFO. Mr. Kerkhoven will start on 27 November coming and will stay until a new statutory CFO has been appointed by the general shareholders meeting at the latest.