ForFarmers feed sales drop sharply, also lower net profit

ForFarmers saw its feed sales decline sharply in the first half of this year. The feed company, with its head office in Lochem, attributes this mainly to the decline in pig farming in the Netherlands and the United Kingdom. Although ForFarmers' net profit is also declining in the first six months of 2022, the company is pleased with the increasing gross profit and EBITDA. Chris Deen, the new CEO of ForFarmers, calls the half-year results 'better than expected' in a statement.

ForFarmers published a brief overview of the half-year figures on Thursday morning before the opening of the stock exchange. The company saw total feed sales fall by 7,4% to 4,5 million tons. Compound feed sales in this volume fell even faster: by 7,9% to 3,2 million tons. Although the pig farming sector has suffered the biggest blows, ForFarmers is seeing a decline in sales in all livestock farming sectors. Only in Poland did sales of poultry feed increase. Ultimately, this results in a net profit for the first half of 2022 of €17,1 million, a decrease of 4,5%. According to ForFarmers, this is mainly due to higher interest costs and a higher tax burden.

Challenging market conditions
The feed company therefore mainly looks at the results arising from operational management. Gross profit increased by no less than 18,3% to €257,30 million. In the statement, ForFarmers reports that the company has been able to pass on the higher raw material and energy costs to its customers for the most part from the second quarter of this year. The growth of the gross profit is somewhat distorted, because ForFarmers had to write off an incidental expense in the same period last year. EDITDA, the operating result excluding depreciation and interest, among other things, rose by 5,6% to €43,1 million. This is the result of higher gross profit and efficiency measures. "Ultimately, the absolute increase in gross profit in the first half was greater than the absolute increase in operating expenses. As a result, underlying EBITDA was higher than originally expected," said Deen. 

Although the sales of feed are falling, ForFarmers' turnover increased sharply due to, among other things, raising prices: by 21,5% to just under €1,6 billion. Deen, CEO of ForFarmers as of 1 July, calls the financial results of the feed group a 'great performance'. "During my training period at ForFarmers, I can present these better than originally expected half-year results, mainly due to the second-quarter results. This is a great performance by the team in challenging market conditions due to the war in Ukraine and the associated further increase in raw materials and energy prices."

ForFarmers announces that it will present a sharpening of its strategy in the course of the fourth quarter of this year. The group does not make any statements about the expectations for the current second half of 2022. According to CEO Deen, the market conditions are too uncertain for that. He points out, among other things, the war in Ukraine, a possible new corona wave and the logistical challenges due to the low water levels in the rivers in the Netherlands. 

Eric the Thrush

Eric is a member of the editorial staff of Boerenbusiness. As a descendant of an arable family, farmer's blood flows through Eric's veins. He considers himself a generalist, but with a preference for economics, trends, markets and marketing.

e.delijster@boerenbusiness. Nl

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