Lochem (The Netherlands) ̶ “The first half-year results show that our Total Feed approach is gaining more and more momentum,” says CEO Yoram Knoop of ForFarmers in response to the solid results of the first half year of 2017.
According to Knoop the innovative Total Feed solutions, in which ForFarmers combines (feed) products, advice and tools, lead to a better return on the farm. “We expect that growth of the result in the second half year, in terms of percentage, will however be lower than the solid increase in the first half-year of 2017.” Reasons for this expectation are, among others, that ForFarmers expects the volume impact of the phosphate measures which were introduced in the Netherlands as of 1 March 2017 to be higher and that the recovery in the United Kingdom takes longer than expected.
The Fipronil case in the poultry sector can lead to large consequences for individual layer farmers in the Netherlands but also in Belgium, says Knoop. “We expect that our volume sales to this sector will be impacted, but that this will be limited on group level.”
Nevertheless, ForFarmers is according to Knoop on course with the previously delivered guidance for the medium term of an on average annual increase of underlying EBITDA in the mid single digits at constant currencies, barring other unforeseen circumstances. The strong growth of EBITDA is the result of both operational improvements and One ForFarmers cost saving projects. The CEO confirms that the company will fully (€60 million) use the received authorisation for the share buy-back programme given the increased trading volume in its share.
There is large uncertainty in the United Kingdom about the consequences of Brexit for the agricultural sector. Farmers are therefore in the experience of ForFarmers more hesitant in, among others, growing the size of their herds, which were reduced last year. In spite of this, the market in the United Kingdom appears to be recovering slowly.
Volume growth in the Netherlands and Germany/Belgium was higher than the volume decrease in the United Kingdom. As of mid 2016 the financial situation for farmers in Europe has significantly improved due to enhanced milk and swine prices. This partly explains the reason for a larger volume growth in compound feed than in Total Feed. As well as higher value-added product groups compound feed and specialties, Total Feed also comprises co-products (dry, moist and liquid) plus seeds and roughage. Total revenue increased by €40.1 million (3.7%) to €1,110.6 million. The like-for-like increase was 3.2%. Net growth through acquisitions/divestments was 3.5%. The devaluation of the Pound sterling led to a negative translation effect impact of €31.6 million (3.0%).
On average, prices of raw materials increased slightly during the first half-year in comparison to the first half-year of 2016. It is customary to pass on changes in raw material prices to customers. Gross profit increased by 0.4% to €207.3 million. There was a like-for-like improvement of 2.8% and a net contribution from acquisitions/divestments of 0.8%. Operational gross profit improvement was largely off-set by a negative currency translation effect (3.2%) from the weaker Pound sterling to euro.
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