'ForFarmers management must intervene quickly'

The performance of ForFarmers has been under pressure for some time. According to analyst Christophe Beghin of Dutch investment bank Kempen & Co it is high time that the management in Lochem took action.

Kempen's analyst hints at three changes in an interview with ABM Financial News. The most striking change of course proposed by the analyst is that the listed animal feed group must quickly withdraw from the United Kingdom. The British branch is not yielding enough, in Beghin's opinion. The analyst's criticism is provocative, because CEO Yoram Knoop has always said that ForFarmers will actually profit of the Brexit† It is not probable that ForFarmers will leave England.

A major acquisition within 6 months
Beghin also believes that ForFarmers should put more effort into acquisitions. As an example, he points to De Hoop Mengleiders, which it is said that ForFarmers acquired cheaply, although he forgets to mention that the acquisition of Vleuten-Steijn Feeds encountered quite a few snags.

ForFarmers expressed its ambition last year to move outside of Europe, but those plans are still on hold. Beghin is increasing the pressure and believes that the board must announce a major acquisition within six months, otherwise the dividend for investors over 2021 must be increased. That dividend looks set to be meager this year, as the performance of the animal feed company is under considerable pressure. Beghin believes that ForFarmers has been performing disappointingly since 2016.

Buying own shares
The analyst also proposes that ForFarmers should buy up more of its own shares. This could boost the stock price. The analyst's criticism is justified in view of the stock price, which has suffered a major scratch in recent years. The price closed yesterday (October 14) at €4,28, which is just above the historic low. 

Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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