News QUARTERLY FIGURES
More volume, less margin for ForFarmers
The listed animal feed group ForFarmers sold more feed in the first quarter of 2021 than in the same period last year. The organically sold Total Feed volume - the total of compound feed, single raw materials and by-products - was stable, but was supplemented by the acquisitions of De Hoop Mengvoeders and Mühldorfer Pferdefutter. While volumes grew, underlying gross profit declined. The company is adjusting its profit forecast for the whole of 2021 downwards. As a result, the share fell sharply on the Amsterdam stock exchange.
The total volume of animal feed sold increased by 1,8%. The compound feed volume increased by 1%. Organically (excluding takeovers), compound feed volumes fell 'slightly' according to ForFarmers, without the company mentioning concrete figures. Despite the increased volumes, gross profit decreased by 2,8% and underlying EBITDA even decreased by 12,8%. The CEO of ForFarmers, Yoram Knoop, speaks of a mixed picture when announcing the operational progress report for the first quarter. He indicated that maintaining and strengthening market positions under highly competitive market conditions has come at the expense of margins.
Volume and profit growth in the Netherlands
The volume sold in the Netherlands/Belgium cluster increased due to the acquisitions of De Hoop Mengvoeders and Mühldorfer Pferdefutter. Although Mühldorfer Pferdefutter is active in Germany, this company reports to the Pavo unit in the Netherlands/Belgium cluster.
The volume of animal feed sold in the ruminant sector decreased. According to ForFarmers, dairy farmers bought less concentrates as a result of the high prices for animal feed and the low prices for milk. The volume sold in the pig sector also decreased. This is due to the warm remediation scheme in pig farming. For the time being, fewer sows are being kept, but the group expects the pig herd to shrink further in the coming months. In the poultry sector, in addition to the acquisition of De Hoop Mengvoeders, ForFarmers was also able to sell more feed under its own steam to both broiler companies and laying poultry companies.
Lower margins in the Germany/Poland and United Kingdom cluster
After the volume sold in the ruminant sector and pig sector in the Germany/Poland cluster already grew in 2020, this trend was continued in the first quarter. In the poultry sector, the company also managed to record volume growth again. In 2020, Polish poultry farmers will raise fewer animals as a result of bird flu and the collapsed market for poultry meat due to corona measures. ForFarmers notes that poultry farmers are slowly starting to rear more chicks in the first quarter.
Total feed sales increased slightly in the United Kingdom. Volumes in the ruminant sector were lower. More feed was sold to pig and poultry customers.
Profit forecast for the whole of 2021 revised downwards
Although ForFarmers expects the dairy, meat and egg markets to recover further when the corona measures are lifted, it is still unclear when exactly that will be. Further uncertainties can be found in nitrogen policy in the Netherlands and the situation regarding African swine fever and bird flu. Now that the targets for EBITDA growth in the first quarter have not been met, the company is forced to adjust the target for the profit forecast for 2021. Organic EBITDA growth of 0%-3% will not be possible this year, according to the company.
Share price lower
Investors were disappointed and put the ForFarmers share sharply lower. Today (Thurs 6 May) ForFarmers was trading at €10.00 around 5,23:7 am, which is almost XNUMX% lower than yesterday's closing price.
Steve Wissink
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