News Revised strategy
ForFarmers shifts focus from growth to greening
When ForFarmers came up with a new strategy in 2020, the management could not have imagined that it would have to be revised again two years later. The – in their own words – rapidly changing market conditions and setbacks in the results demanded a second version. Where the focus used to be on growth, the listed animal feed group is now emphatically focusing on greening. Chain cooperation and a local market approach are also a theme. In addition, ForFarmers will from now on avoid concrete profit expectations.
Perhaps most striking is that the revised plans devote only limited attention to acquisitions, something that ForFarmers often emphasized in previous strategies. The slogan 'Build to grow' what was still prominently above the plans in 2020 is now nowhere to be found. ForFarmers does indicate that it wishes to strengthen or broaden its position in the home markets. Possibly also through mergers. They also remain open to new markets. Whether this is in or outside Europe is left open.
At the beginning of this year, growth aspirations were set in new markets parked for a while by disappointing results. Analysts thought that in the revised strategy ForFarmers might abandon its international growth ambitions for good, but that appears not to be the case. Compared to two years ago, the acquisition ambitions are much less concrete. At that time it was still indicated that two new countries should be tapped by 2025.
New division
In contrast, the new plans focus much more on sustainability and greening. Among other things, reference is made to the green deal that requires this. A new division is being set up within ForFarmers for circular feed concepts. This unites the activities of subsidiary Reudink (organic) and ForFarmers DML (co-products). This division starts in the Netherlands. With this, ForFarmers cleverly responds to social trends regarding food waste and the valorisation of residual flows. In addition, investors are increasingly critical of the sustainability performance of listed companies.
What is also striking is that ForFarmers emphatically strives for a local market approach and chain cooperation. In concrete terms, this means that more responsibility will lie with the local management teams. The market conditions call for consolidation and cooperation in the chain, from feed producer to retailer. With this, ForFarmers seems to want to take more initiative in the chain or perhaps even aspire to a role as chain director.
No profit expectation
ForFarmers indicates that it will no longer express profit expectations in the future. Two years ago, the target for annual Ebitda was set at €125. Under normal circumstances, the aim is now to achieve a return on invested capital of at least 10% by 2025. In that case, we have to step up our game compared to the current financial performance. The dividend policy remains the same and aims to pay a cash dividend of between 40% and 60% of underlying profit after tax. With the meager profit figures of recent years, that bandwidth is quite ambitious, incidentally, so as not to have to eat into the balance sheet.
New CEO
Earlier this week, ForFarmers reported that former Fonterra CEO Theo Spierings will take office as new CEO in January. In principle for the period of one year. This means that a successor has been found for Chris Deen, who had to put down his work due to illness shortly after taking up office in July and then stopped. Under the leadership of Spierings, the revised plans must take shape.
Wouter Job
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