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ForFarmers annual report: Volume growth in a turbulent year

The acquisitions that ForFarmers made in 2018 resulted in volume growth in a “turbulent” year.

Profit of animal feed company ForFarmers fell sharply in 2019. The net result was 69.8% lower than a year earlier. Sales grew by 2.4%. Slightly more compound feed was sold, which is due to the acquisitions ForFarmers made in 2018. This is evident from the annual results that the company published last week. Compound feed volume was up 1.9% (7.08 million tons) and Total Feed, which includes feed concepts, advice and digital resources, up 0.7% (10.09 million tons). Autonomously, the volume of compound feed decreased by 3.2% and Total Feed by 2.9%. “For the first time in years, we are not satisfied with the results, especially the results of the first 6 months. At that time, we were dealing with a poor purchasing position for raw materials and a decrease in volume,” according to CEO Yoram Knoop of ForFarmers during the presentation of the annual figures last week. “Nevertheless, in a turbulent and difficult market, we managed to achieve a volume increase, due to acquisitions.”

Yoram Knoop, CEO ForFarmers: “The acquisitions were not without a struggle. For example, during the acquisitions employees left, who also took customers with them. As a result, we lost more than expected turnover." Photo: Michel Zoeter
Yoram Knoop, CEO ForFarmers: “The acquisitions were not without a struggle. For example, during the acquisitions employees left, who also took customers with them. As a result, we lost more than expected turnover." Photo: Michel Zoeter

Net profit fell

Net profit decreased to € 17.7 million, partly due to an impairment of the activities in the United Kingdom of € 25.6 million. This depreciation was necessary because sales fell short of expectations, says Knoop. Turnover increased by 2.4% to € 2.46 billion. Organic, excluding currency effects, acquisitions and divestments, sales decreased by 2.4%.

Looking for suitable acquisitions

Last year, ForFarmers had only 1 modest acquisition in the United Kingdom. Knoop: “ForFarmers is still looking for suitable acquisition candidates.” He sees a lot of competition in the livestock market in Western Europe and Knoop expects that the consolidation will continue in the coming years. It seems that the acquisitions in particular should offer ForFarmers relief.

...in a turbulent and difficult market, we managed to achieve a volume increase, due to acquisitions.” – Tiran Knoop, CEO ForFarmers.

Growth in Poland

ForFarmers is active in the Netherlands, the United Kingdom, Belgium, Germany and Poland. Only in the Germany / Poland cluster was more Total Feed produced last year, which included feed concepts, advice and digital resources, and increased sales. Total Feed sales in the cluster increased by 15.8% and sales by 16.7%. This was entirely due to the contribution of the activities in Poland. “We went to Poland because there is no reduction in the livestock,” says Knoop. The poultry sector in particular is growing there, as more slaughtering capacity becomes available for poultry products intended for export.

Profit of animal feed company ForFarmers fell sharply in 2019. Photo: ForFarmers
Profit of animal feed company ForFarmers fell sharply in 2019. Photo: ForFarmers

Pig sector under pressure

In the Netherlands / Belgium, sales of total feed remained unchanged, sales of compound feed fell and sales fell slightly by 0.7%. The volume growth due to the acquisitions of Maatman and Van Gorp Biological Feed in the Netherlands and Voeders Algoet in Belgium was almost equal to the autonomous volume decrease. Volumes in the pig sector were under pressure throughout the year. For the next 2 years, the company expects a further decrease in the pig herd from 7 to 10% in the Netherlands. There was a decline in sales to dairy farmers, especially in the first half of the year. According to Knoop, this is entirely due to a smaller number of animals and not to customers leaving for competitors. “We managed to maintain our market share in all countries,” said the director.

We see that the margin per ton improved in the second half of the year and that there is recovery and growth.” – Tiran Knoop.

UK feed volume decreased

In the United Kingdom, Total Feed volume decreased by 7.7% and sales by 2.9%. “Our sales in the UK is more dependent on weather conditions than in other countries. Less compound feed was sold because sheep and cows where outside for a long time. “We see that the margin per ton improved in the second half of the year and that there is recovery and growth.”

Also interesting: Together with strategic partner Trouw Nutrition, compound feed manufacturer ForFarmers has developed a new approach for determining the nutritional value of raw materials. Find out more...

Strong financial position

Although according to Knoop, the integration of the acquisitions went well in 2019, the company also ran into a number of issues. “The acquisitions were not without a struggle. For example, during the acquisitions employees left, who also took customers with them. As a result, we lost more than expected turnover. At the same time, the acquisitions also yielded more synergy benefits than expected.” According to Knoop, the financial position of ForFarmers is strong: “We have practically no debt, despite the share buybacks and acquisitions.” ForFarmers therefore has sufficient financial space to realise its growth plans, according to the annual report.