ForFarmers: higher costs and volume growth

ForFarmers made volume gains in the first quarter of 2018, compared to the same period in 2017. However, the listed compound feed company has to contend with higher costs.

ForFarmers realized the volume growth on the European mainland; in the Netherlands, Germany and Belgium. In the United Kingdom (UK), sales showed a slight decline. This was in 2017 also the case. Gross profit is rising in all countries.

The net profit also rose, partly due to the non-recurring income from the sale of the arable branch to CZAV. CEO Yoram Knoop is satisfied with the volume growth. However, the so-called key figure EBITDA (measure of gross profit before the deduction of overhead costs) shows a decrease. This is due to rising fuel costs.

White smoke from Poland
At the beginning of this year, ForFarmers announced the acquisition of the Polish compound feed company Tasomix. Meanwhile, authorities in Poland have given the green light, meaning the deal is almost complete. Only a few administrative formalities still need to be completed. During this process, ForFarmers made use of external advisory services. This also resulted in higher costs in the first quarter. CEO Knoop lets you know about it to look out to start operations in Poland.

KBC Securities, the largest Belgian listed company, recently reacted positively to the acquisition of Tasomix. They see the acquisition as a prelude to further growth in Poland. However, the bank would have preferred that ForFarmers had made an acquisition in the countries where the company is already active.

Course down
Analysts and investors are somewhat disappointed with the results of ForFarmers. Shortly after trading on the Damrak in Amsterdam started, the share was more than 1% lower at € 11,80. However, this price position is historically high; especially last March, the share picked up considerably. In addition, the ForFarmers share rose by 2% on Wednesday 2,6 May to a closing position of €11,94.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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