ForFarmers is doing well. Very well, in fact, and much better than both friends and foes had expected. For two years now, the quarterly figures have been improving consistently, something they at the headquarters in Lochem are probably even surprised by. The conclusion is that after some difficult years, everything is finally falling into place. However, things aren't going anywhere, as the market's tailwinds are starting to weaken.
The EBITDA that ForFarmers recorded for the whole of 2024 was at the end of the Third quarter Already in the bag. The best result ever is therefore within reach. The 10 million tonne threshold will also be surpassed again in 2025, something last achieved in 2019. This is, of course, largely due to the acquisition of Van Triest, with which approximately 1 million tonnes were purchased last year. This also boosts profitability, killing two birds with one stone.
High milk price
ForFarmers is also managing to grow volumes organically, after a significant organic decline of -6,8% and -5,2% in 2022 and 2023, respectively. This is partly due to the influx of new customers, and existing customers are also increasing their feed intake. This is inextricably linked to the high milk price in recent months. Milk production in domestic markets skyrocketed this summer, in the Netherlands (+6,9%), Germany (+5%), the United Kingdom (+7,4%), and Poland (+5,7%). Moreover, in Poland, many broiler chickens are being slaughtered again, after production was thrown off balance by avian influenza. This is also contributing to the growth of compound feed sales.
Favorable commodity markets
The commodity markets are also favorable for ForFarmers. In a market with almost continuous declines in feed prices in recent years, it has become easier for animal feed companies to maintain margins. While the battle for customers demands competitive prices, this is more manageable in a declining market. Furthermore, the figures are benefiting from the cost savings implemented in recent years. Factories were closed and significant cuts were made to management levels. These developments can be seen as an "extra boost."
Yet, these positive figures don't just happen overnight. The new management clearly opted for more local control to foster a better understanding of local businesses. Furthermore, the top management made clear (geographical) choices. Divesting its operations in Belgium and focusing more on the growth market of Poland was a good move. In recent years, the company has also clearly shifted its focus to poultry farming and the use of residual flows in its recipes and rations. ForFarmers' traditionally heavy reliance on compound feed sales in the Dutch pig farming sector has decreased. This has now resulted in clear organic growth, primarily achieved in the sale of poultry feed and by-products.
For 2025 as a whole, ForFarmers will present excellent results in February, likely with the highest EBITDA ever. However, the future remains to be seen. The outlook is unclear.
Markets are turning
Raw material prices have been rising slightly since the summer, likely bringing an end to the declining compound feed prices soon. The additional margin from cheaper raw materials is therefore temporary. Furthermore, the current implosion of the milk price is a concern. This motivates dairy farmers to take their foot off the gas. The only way to do this is to reduce feed consumption or send cows to the slaughterhouse. The final blow of the phasing-out scheme in the pig farming sector will also have to be felt in the fourth quarter, when the last participating farms are running out of steam.
Moreover, the effects of the cost savings will no longer be reflected in the financial results in 2026. Furthermore, ForFarmers did not make any major acquisitions that could boost its results, like Van Triest did last year. The Voluntary Termination Scheme for Livestock Farming Locations is expected to open in the spring of 2026, and the number of cows in the Netherlands will therefore continue to decline. Furthermore, avian influenza is spreading rapidly again this autumn, which could cause a rapid decline in animal numbers in the poultry sector. In short: the effect of the "extra boost" could well have worn off. The political landscape in the Netherlands, the most important sales market, also remains uncertain with a new government on the way.
Course doesn't last
Perhaps this is also why ForFarmers' share price, despite the strong figures of recent quarters, remains somewhat undervalued. With lower EBITDA, the share price would have more than doubled a few years ago. Despite positive analyst reports, investors are apparently hesitant to invest in a company operating in shrinking markets with thin margins. The valuation reflects concerns that profits are peaking, while volume growth in the Western European livestock sector remains under structural pressure.