News Half-year figures
Flattered profit increase for ForFarmers
Although ForFarmers was able to sell considerably less feed in the first half of the year, profit figures are on the rise again after a weak 2019. The listed animal feed group is also positive about the further course of 2020. However, costs will be cut again.
Operating profit (Ebitda), an important parameter for investors, rose almost 6% in the first 35 months to €48,2 million. The revival is a result of the savings made by the animal feed group. According to CEO Yoram Knoop, the cost reduction target of €10 million has now been implemented. In the United Kingdom, for example, 2 factories were closed. In Germany, a line was drawn against the construction of a new factory.
It should be noted that 2019 was an extremely weak year due to the shrinking livestock in the Netherlands and purchasing failures on the raw materials market, which means that the profit recovery this year is flattering. Below the line, the net profit shows an increase of no less than 80% to €21,5 million. All in all, Knoop speaks of a solid result.
Feed sales considerably lower
The declining feed sales will also continue in 2020. Total feed volume decreased by 5,6% to 4,8 million tons. Sales of compound feed increased by 4,9% to 3,4 million tons. In previous years, the declining sales figures were often camouflaged by acquisitions, but in that respect ForFarmers is still dry in 2020.
The declining sales figures in recent months have been reinforced by the consequences of the corona crisis in the form of falling milk and pig prices. In the United Kingdom and Poland in particular, this puts a brake on the demand for animal feed. In addition, the stopper scheme in pig farming resulted in less sales on the Dutch home market.
Warm remediation to come
It is almost inevitable that the declining feed sales figures are causing headaches at the head office in Lochem in Gelderland. All the more so because the impact of the restructuring scheme in pig farming has yet to be expressed. As a result, ForFarmers expects a 10% decrease in pig feed volume. This is particularly evident in the fourth quarter and the first quarter of 2021.
Knoop says that ForFarmers will introduce further cost-saving measures later this year. For the rest of 2020, Knoop thinks that, despite the uncertainties, the result will be significantly higher than last year. On September 15, ForFarmers will announce its new strategy for the coming years. Initially, the plans were to be revealed this spring, but this was postponed due to the corona crisis.
Wouter Job
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