ForFarmers Group reported what it called “disappointing” results for the first half of 2019.
The European farmers cooperative reported a 61.5% decline in underlying profit, to EUR11.9 million (US$13.2 million), and a 1.7% drop in gross profit, to EUR214.1 million.
Revenue rose by 11.6% (EUR132.8 million) to EUR1,274 million, including an impact from acquisitions of 8.7%. While there was a like-for-like decline in Total Feed volume, the relating revenue increased by 2.6% as a result of raw material prices passed on to customers which were higher than in the same period of 2018.
Total Feed volume was up 5.2% at 5.1 million tons, with acquisitions in Poland, the Netherlands and Belgium contributing 6.8%. Compound feed volume, part of the Total Feed portfolio, rose by 7.2%, a larger increase in percentage terms than the volume growth of Total Feed. Acquisitions contributed a 9.8% increase in compound feed volume, while volume on a like-for-like basis declined by 2.6%.
“The results for the first half of 2019 were disappointing, but in line with our expectations as disclosed in the first-quarter trading update,” said ForFarmers CEO Yoram Knoop. “The acquisitions, which we made in the second half of 2018, made a positive contribution, but this was not enough to offset the negative effects of the volume decline and the unfavorable purchasing position which we experienced in the first half of the year. We have reviewed and tightened up our purchasing procedures including having shortened the permitted purchasing coverage lengths for important raw materials.”
This year, ForFarmers announced its efficiency plans to decrease the group operating costs by EUR10 million (US$11.2 million) in 2021, versus 2018. These plans include closure of several feed mills.
“Since announcing our efficiency plans in March, we have revealed plans to close four mills this year,” Knoop said. “These plans will contribute to the targeted structural cost savings of EUR10 million by 2021.”
