ForFarmers first-half revenue up 3.7 percent
Total feed volume up 3.6 percent
ForFarmers N.V. reported EUR1,110.6 million (US$1,303.4 million) in revenue for the first half of 2017, which is up 3.7 percent from the same period a year ago.
Gross profit was up 0.4 percent to EUR207.3 million, including negative currency translation impact of 3.2 percent.
Total feed volume was up 3.6 percent to 4.7 million tons, on growth in the Netherlands and Germany/Belgium and a decrease in the United Kingdom.
“The first half-year results show that our Total Feed approach is gaining more and more momentum,” said ForFarmers CEO Yoram Knoop. “In our innovative Total Feed solutions, we are combining (feed) products, advice and tools. Products and advice are aligned with one another to lead to a better return on the farm.”
The increase in compound feed volume was 6.2 percent. Vleuten-Steijn, acquired in 2016, contributed 4.8 percent to this growth and like-for-like volume growth amounted to 1.4 percent. Volume growth in the Netherlands and Germany/Belgium was higher than the volume decrease in the United Kingdom. As of mid-2016, the financial situation for farmers in Europe has significantly improved due to enhanced milk and swine prices. This partly explains the reason for a larger volume growth in compound feed than in Total Feed. As well as higher value-added product groups compound feed and specialties, Total Feed also comprises co-products (dry, moist and liquid) plus seeds and roughage.
Recovery in UK ag sector
The company said the first signs of recovery in the U.K. agricultural sector are visible, but the short-term forecast is still uncertain.
“Farmers, especially in the Netherlands and Germany/Belgium, are buying more high-quality feeds again to increase their production,” Knoop said. “There is large uncertainty in the United Kingdom about the consequences of Brexit for the agricultural sector. Farmers are therefore more hesitant in, among others, growing the size of their herds, which were reduced last year. In spite of this, the market in the United Kingdom appears to be recovering slowly.”
In July, eggs from several Dutch producers were recalled after residues from the pesticide Fipronil were detected. ForFarmers warned of the effects of the crisis.
“The Fipronil case in the poultry sector can lead to large consequences for individual layer farmers in the Netherlands but also in Belgium. We expect that our volume sales to this sector will be impacted, but that this will be limited on group level. Nevertheless, we are on course with the previously delivered guidance for the medium term of an on average annual increase of underlying EBITDA in the mid-single digits at constant currencies, barring other unforeseen circumstances.”
Share buy-back program
In April, ForFarmers initiated a share buy-back program in order to make its balance sheet more efficient, among other things.
“We confirm that we will fully (EUR60 million) use the received authorization for the share buy-back program given the increased trading volume in our share,” Knoop said.