Quarter after quarter, ForFarmers is able to present better figures. In a challenging market – with little room for margin and shrinking animal numbers – the listed animal feed company has clearly regained its upward trend. The company's strategy is sometimes quite daring, but successful for the time being. The stock market value is now also at its highest level in a year and a half.
Coincidence or not, but since Pieter Wolleswinkel took office as CEO about a year and a half ago, things have been going well clearly better with the company. This is not so much due to market conditions, which are still challenging due to the shrinking animal numbers. The upward trend is a combination of factors. For example, the loss-making activities in Belgium were divested last year and are therefore no longer a nuisance in the books. This drastic step is therefore immediately effective. The raw materials and energy markets are also much less volatile this year, making margins easier to monitor.
Knowledge pays off
But that does not mean that volume growth on the Dutch domestic market has been achieved. In the third quarter, ForFarmers achieved no less than 6% autonomous volume growth. It is inevitable that other feed companies in our country will suffer from this. ForFarmers has been focusing on knowledge and feed advice on the farm for years and that only now seems to be really starting to pay off. Especially in dairy farming, where dairy farmers have to use feed to reduce the CO2 footprint. Feed companies with a large scale can generally organise this knowledge better than smaller parties. The footprint is also increasingly becoming an issue in pig and poultry farming, which means that time is on their side.
Perhaps this is also the reason why ForFarmers recently cancelled its membership branch organization Nevedic, with which she incidentally threw a big stone in the pond. ForFarmers gave as a reason that it wants to become more sustainable faster than the collective within Nevedi wants. But probably also playing a role is that they prefer to keep the knowledge on board instead of sharing it with competitors. As market leader, it is more give than take.
Acquisition and joint venture
Another notable step that was taken is the recent acquisition of Van Triest Veevoeders. This brought in around €70 million in turnover, with a neat net profit margin of over 6%. Strategically, it is also an interesting player, due to its strong position in residual flows. But traditionally, this somewhat headstrong family business has a clearly different profile that is difficult to integrate. Unlike in the past, this is being solved by not renaming the company ForFarmers, but by positioning it separately as Van Triest CirQlar. Probably not unimportant for customer loyalty either.
Also on the German market a fairly drastic step was taken last quarter by bundling the activities with team agrar in a joint venture. This step is a logical consequence of the local approach of ForFarmers, which Wolleswinkel strongly focuses on. If it is better to share the business, this is not neglected. The CEO has unknowingly shaped the company considerably in recent months. Further steps are probably on the way, as the CFO Marloes Roetgerink, who took office this year, announced in an interview with ABM Financial News in September. She indicated that she was looking forward to further acquisitions. Probably in the four countries where ForFarmers is already active, but possibly also beyond. In the United Kingdom, where the tide is against it, something still seems to have to happen anyway. This after an earlier failed attempt to bundle the British activities - just like in Germany - with a local party.
On track for some goal
Analysts who follow ForFarmers closely speak of 'steps in the right direction'. The share has now climbed back up to over €3,30 and is thus back to the level since the outbreak of the war in Ukraine, which pushed the share price down even further. Due to poorer performance in the past, all targets were abandoned, except for the return on invested capital. ForFarmers claims to be on track to achieve this target of 10% again.
Although the upward trend has clearly been set, the challenges for ForFarmers remain undiminished. Only Poland is still a growth market. And on the Dutch domestic market, the effect of various termination schemes (Lbv and Lbv-plus) has yet to be felt. But the current management is stable and not afraid to take the bull by the horns when necessary. For the time being, this is paying off in better results.