News Annual figures
ForFarmers sees decline in feed sales and lower turnover
International animal feed group ForFarmers sold less feed last year, achieved lower turnover and also saw a decline in gross profit. The corona crisis, animal diseases such as African swine fever and the high raw material prices are the basis for this, according to the company. On the other hand, the dividend will be higher than a year earlier.
ForFarmers sold a total of 9,7 million tons of feed in the past year. It is a decrease of 3,5% compared to the previous year. Specifically for the Netherlands/Belgium, the Total Feed volume decreased by 2,6% to 5,1 million tonnes. "This was partly due to the drop in sales to beef farmers, who saw the demand for their products fall as a result of the corona virus. The Total Feed volume in the pig sector remained virtually stable, as pig farmers purchased more DML products," the company said. in a press statement.
ForFarmers' total sales of compound feed fell by 3,9% to 6,8 million tons over the past year. In the Netherlands, this decrease was largely caused by volume loss as a result of the stopper arrangement. In contrast, in Germany and Poland more compound feed was sold to dairy farmers and pig farmers, as if this was not enough to compensate for the loss in poultry farming.
Lower turnover, higher dividend
As a result of the lower feed sales figures, the turnover of the international animal feed group in 2020 decreased by 4,5% to €2,35 billion. Gross profit decreased by 1,7% to €433,2 million. "Despite a product mix with more specialties, there was margin and volume pressure as a result of the overcapacity caused by the corona crisis and the associated measures", ForFarmers explains the lower gross profit.
In contrast, the underlying net profit, the profit attributable to the shareholders of the company, increased by 10% to €46,3 million. As a result, a dividend of €0,29 per share will be paid, which equates to a distribution of 60% of the underlying net profit. Last year the dividend was slightly lower, at €0,28 per share. "Given the circumstances, however, the results are more than satisfactory," CEO Yoram Knoop said in the press release.
Three big themes
The feed company states that the annual results are largely influenced by 3 themes. First of all, it concerns the corona crisis. "The agricultural sector was particularly affected by the closure of the catering industry and other out-of-home segments, which resulted in a significant loss of demand. The export of meat to countries outside Europe was also temporarily suspended," the company writes. Nevertheless, ForFarmers reports that it has hardly been hindered by the measures in operational processes. It does write that it experienced pressure in the second half of the year due to the declining demand. In Poland and the United Kingdom in particular, demand fell sharply. In the latter country, sales fell by 7,5% to 2,5 million tons.
Secondly, the group refers to the various animal diseases that play an active role in livestock farming. These include bird flu in Poland and African swine fever in Germany and China. The high raw material prices also influenced the annual results of ForFarmers. "The prices for various raw materials were up to more than 30% higher at the end of the year than a year earlier. These fluctuations in raw material prices are usually passed on to customers, but the passing on is not always done on time or completely," the group writes.
Look ahead
"Looking ahead, despite the ongoing uncertainties, I am very confident in our strategy," said Knoop. By challenges, the CEO refers to, among other things, the potential for declining livestock numbers due to pressures to reduce environmental impact. "Northwestern European producers in particular continue to be confronted with sustainability and environmental measures. This has a dampening effect on their growth opportunities."
Looking at the longer term, the feed company expects the European dairy sector to grow very slightly, the beef and pig sectors will decline and the poultry sector expects a slight growth. "After all, there continues to be an increasing worldwide demand for milk, meat and eggs."
Kimberly Baker
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