ForFarmers expects decline in livestock

ForFarmers takes into account that the nitrogen policy in the Netherlands will lead to a decline in livestock, as stated in the press release about the results in the third quarter. 

Although there is still a lot of uncertainty, the listed feed company expects the livestock to shrink in the coming years. This is because the government is making money available to buy up farms in the vicinity of Natura 2000 areas. ForFarmers notes that livestock farmers are currently reluctant to expand. This is despite the fact that pig prices are good, due to the large meat shortage in China.

Less food sold
The shrinking animal numbers are already reflected in the figures for the past quarter. Despite additional acquisition volumes, feed sales showed a slight decrease of 0,6%. The compound feed volume decreased by 0,4%. Exact tonnages are not mentioned. EBITDA (measure of gross profit before overheads) did increase, by 6,9%. Gross profit remained virtually stable compared to the same period last year.

From the summer of 2018, ForFarmers was in a difficult period, mainly as a result of unfortunate purchasing positions and the drought. According to CEO Yoram Knoop, this period has now ended. However, ForFarmers warns once again that profit in 2019 will be lower than in 2018. This means that profit shows a decline for the second year in a row.

Share penalized
Lower profitability and impending livestock shrinkage are worrying investors, the share price shows. Half an hour after the opening of stock exchange trading, the share, listed on the Midkap in Amsterdam, recorded a historic low of €5,35. More than a year ago, the stock was still above €12. 

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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