The Danish competitor of Europe's largest animal feed company ForFarmers is not concerned about a shrinking German livestock herd. In recent years, the DLG group has achieved stable profit figures. In addition to their size, both companies have in common that they realize an important part of the turnover in Germany and Poland.
The North German subsidiary HaGe of DLG realizes an annual turnover of more than 2 billion, representing a significant part of the total turnover of the DLG group: €6,6 billion in 2018. DLG has a 54% interest in HaGe. In recent years, the activities in the southern German market have been particularly profitable. The subsidiary Team AG Energy, which accounts for more than 30% of the total turnover of the DLG group, is also doing well in Germany. Including the turnover of the premix subsidiary Vilofoss, DLG group realizes 60% of the turnover in Germany.
Anniversary year
Partly to emphasize the importance of the German market, the head office will be moved from the Danish capital Copenhagen to the much smaller Fredericia on Jutland, not far from the German border. Jutland is the homeland of the DLG group, a cooperative enterprise owned by Danish farmers, which is celebrating its 50th anniversary this year.
Unlike ForFarmers, DLG is not active in the United Kingdom except for minerals and vitamins, while the other Danish multinationals in agri-food (such as Arla and Danish Crown) are. In contrast, DLG has strong market shares in the Baltic and Scandinavian countries. These are countries where ForFarmers achieves little or no turnover.
France spearhead
The product portfolio of both companies also differs, in addition to the aforementioned activities of the subsidiary Team AG Energy (sales of fuel and lubricants, among other things). While ForFarmers has said goodbye to its business activities outside livestock farming and has focused on European market leadership in animal feed production, DLG is not only active in livestock farming (30% of turnover) but also in arable farming, horticulture and agricultural seeds. In the processing of grain, DLG is even the largest in Europe.
ForFarmers and DLG have in common that they have a profitable division that produces minerals and vitamins. The Vilofoss division is a subsidiary of DLG that is active all over the world, even in China. A joint venture was recently established with the French ARC, in order to gain access to the market for piglet feeds in France. Increasing turnover in France is an important spearhead in the strategy of the DLG group.
Drought depresses result 2019
In mid-August, DLG presented half-year figures that were described as solid: the operating result (EBITDA) amounted to €79,6 million and the profit before tax of €20,2 million. Turnover amounted to €2019 billion in the first half of 3,28. This is comparable to the first half of 2018.
Due to the much lower yield in the entire Baltic Sea region due to the extreme drought in 2018, the grain trade was about €600 million lower than previously estimated. Profit and turnover remained stable. This is thanks to the sales figures of animal feed raw materials and compound feed in the three most important markets, Denmark, Germany and Sweden. In both 2017 and 2018, the DLG group achieved a turnover of €6,6 billion. Profit before tax was €75 million in 2018 and €100 million in 2017.
Difference in equity
Although DLG presents stable profit figures year on year, ForFarmers' big brother in the Baltic Sea region has barely half of the equity that ForFarmers has in reserve. Solvency amounted to less than 2018% in the 30 financial year. Incidentally, the North German subsidiary HaGe does have a solvency that corresponds to the shareholders' equity of ForFarmers, which is around 50%.
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