Poultry is a boon for ForFarmers in Poland

In July 2023, the activities in Poland were expanded with the acquisition of Piast. This company also focuses primarily on the production of broiler feed. At the time of the acquisition, Piast produced approximately 410.000 tonnes of feed per year. According to the company, the positioning of Piast's factories increased its working area in the growth centres of Poland.

Autonomous growth in Poland compensates for shrinkage elsewhere
The total volume of feed that ForFarmers added to its operations amounted to approximately 805.000 tonnes with the above developments. This week the company shared via its social media channels that the total volume of Tasomix has passed 1 million tonnes for the first time. Delivery to the customer was on video recorded. The autonomous growth compared to the acquired volumes should amount to approximately 195.000 tonnes, which amounts to almost 20% autonomous volume growth. The growth in Eastern Europe thus somewhat compensates for the shrinkage that has occurred in the other countries where it is active. In countries such as the Netherlands, Germany, Belgium and the United Kingdom, the volumes sold have been under pressure for years, although the company seems to be able to compensate for the volume shrinkage in these areas in 2024 to have gotten it under control for the time being. 

With the total volume now reaching 1.000.000 tonnes, the Polish market is becoming increasingly important for the group. Measured against the total annual production of 8,4 million tonnes in 2023, Poland's share of the total volume now amounts to well over 10% of the total. This has made Poland an important pillar with additional growth potential in the coming years. 

Effect on results
For years, ForFarmers' strategy has been aimed at being one of the larger players present in the countries where it is active. This provides for economies of scale that should ultimately make a positive contribution to profitability in these areas. In countries where it does not have a leading position in terms of volumes sold, the margins are only meager, so the reasoning goes. In Poland, ForFarmers now has a number 3 position on the free compound feed market after de Heus and Cargill, according to ForFarmers in the 2022 annual report. This leading position also seems to make a positive contribution to the company's profitability in the Germany and Poland cluster.

In the 2017 annual report (the year before the first step in Poland), an underlying EBITDA of €15,5 million was achieved in the Germany cluster, which now also includes Poland. This included the activities in Belgium that were sold in 2023. The volume sold was around 2,11 million tonnes at the time. In 2023, the underlying EBITDA in the Germany/Poland cluster amounted to no less than €29,5 million with a total volume sold of 1,94 million tonnes. The profitability per tonne of feed therefore shows a clear increase.

Price looks up
The results show that the (former) management of ForFarmers made a good choice to partly shift the focus to growth markets. The effort to gain a foothold in the Polish growth market seems to pay off in both volume growth and a positive development in underlying profitability. With this, the company tries to better respond to growth opportunities and become less dependent on the shrinking livestock populations in Western Europe.

The decline in animal numbers in the home region will most likely continue in the coming year. Investors would rather not see a decline. They are therefore most likely very happy with the fact that the strategic choices, after years of falling prices, are bearing fruit. The move towards Poland has certainly contributed to this. The ForFarmers share was listed at the end of last week at its highest level since April 2022 and is now at around €3,50. This fits in seamlessly with the price target that the Belgian bank Degroof Petercam gave in September.