Background Strategy
ForFarmers keeps cards to their chest for a while
ForFarmers' new strategy is still a long way off. Initially, the cattle feed company reported that it would lay the cards on the table shortly after the summer, which will now be mid-November. A setback is that they have to do without the newly appointed CEO Chris Deen, who is absent for the time being due to illness.
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Choose the subscription that suits youWith the arrival of Deen, ForFarmers thought it could start a new chapter. Finding a new CEO took some time and less than three months after taking office, Deen was forced to resign from his job for the time being. Considering an official press release went out, his absence will probably last a longer time. This is not good news for various reasons, not for Deen himself, but also for ForFarmers. The company has been in troubled waters for some time and needs guidance. The daily business will probably continue without Deen, but the company will have to make a few strategic decisions in the coming months.
Nitrogen Policy
The animal feed giant has suffered significant volume losses on its home markets in recent years. The Dutch - the most important - market in particular is a point of concern. The nitrogen policy threatens to further shrink the livestock population. Other feed companies assume 10% to 20% shrinkage. That would be disastrous for ForFarmers to keep the tonnages afloat. A few years ago, the then management formulated ambitious plans to tap two markets outside Europe. These ambitions were reduced due to disappointing performance on hold put.
Separately, it was striking that investors and analysts read these ambitions as panic football and not as a prelude to a better geographical spread. The risks would be far too great. These ambitious plans are probably easier said than done. Analysts suspect that ForFarmers will adjust its ambitions in mid-November and continue to focus on Europe, where they are already the largest. This completely undermines the plans. The question is whether this twist will enthuse investors, as the current strategy also seems vulnerable.
Stock price
In mid-September the stock market value fell to below €2,60 per share. The price rebounded this summer due to unexpectedly better half-year figures, but evaporated just as quickly when the drought took hold in August. About 25% of the stock market value was lost due to the prospect of significantly higher logistics costs, as a result of the low water levels in Northwest Europe. Until mid-November, ForFarmers will keep its cards close to its chest and investors and farmers will be left in the dark. The latter often did not like the overseas plans either.