Lochem, 9 November 2017
ForFarmers third quarter 2017 Trading Update
Highlights third quarter 20171:
- Volume Total Feed: growth in all
clusters
- Gross profit: growth (including
negative currency translation impact Pound sterling)
- Underlying EBITDA2: limited
growth
- (Market)circumstances in the
United Kingdom remain difficult
The volume Total Feed increased in the clusters
the Netherlands and Germany/Belgium in line with the first half
year. Aside from organic growth, the Dutch Vleuten-Steijn (acquired
as of October 2016) contributed significantly. The Total Feed
volume in the United Kingdom increased for the first time this
year.
In all clusters, volume growth in compound feed
was larger than in Total Feed. This indicates that the financial
situation of farmers in general has improved and that there is more
demand for value added feeds. Milk prices are higher than last
year. Pig prices have started to decline in the third quarter of
2017, but are generally still on a historically high level. The
consolidated revenue increased as a result of volume growth and
rising raw material prices, which are passed on to customers. Gross
profit rose, including a negative currency translation impact of
the Pound sterling, especially in the clusters the Netherlands and
Germany/Belgium. In local currency, gross profit in the United
Kingdom was nearly equal in the third quarter, whereas there was a
decline in the first half year.
"Our third quarter results paint a positive but
varied picture. We have sold more volume in all clusters. In
addition, the product mix improved, particularly on the Continent,
which led to a better gross profit. In the United Kingdom, however,
we are facing challenges, both in the market as in our own
organisation. The reliability of our service to our customers was
negatively affected by a shortage of drivers. In order to improve
the service levels, with which good progress has already been made,
additional costs were made to deploy 3rd party
logistics providers. We still remain positive about our mid to
long-term United Kingdom strategy.
Throughout the ForFarmers group, our prime objective is to improve
the return on the farm. We recently launched our new sow concept
NOVA, simultaneously in our four countries of operation, which
focuses specifically on healthier animals and a better production
for the farmer", states Yoram Knoop, CEO of ForFarmers.
(1) Results and developments of the third quarter
2017 are compared to the third quarter 2016, unless stated
differently
(2) Underlying EBITDA means EBITDA excluding incidental items
Developments per cluster
The Netherlands
ForFarmers has sold more volume of both Total Feed and
compound feed. This was due to organic growth and especially the
acquisition of Vleuten-Steijn. The Total Feed volume development
was in line with the first half year, that of compound feed was
higher. Contrary to our earlier announced expectation that volume
in the dairy sector would decrease following the phosphate measures
of 1 March last, more volume was sold in this sector. After the
enforced decrease of the number of animals, farmers are currently
focusing on increasing the milk production per cow, also due to the
current milk price, and accordingly to a higher demand for
performance feed.
More volume was sold in the slightly decreasing
swine sector, both organically as through Vleuten-Steijn. Volume
also increased in the poultry sector. Reudink (organic feed) again
showed volume growth in the third quarter.
Germany / Belgium
The volume growth in compound feed was higher than in
Total Feed in all sectors. Total Feed volume growth was in line
with the first half year. This was driven by, amongst others, the
new dealers which were attracted last year and the additional sales
advisors. The stronger focus on customer segmentation, and the
accompanying sales organisation, are starting to bear fruit. The
focus on cost control, however, remains important.
United Kingdom
Volume increased in both Total Feed and compound feed
in the United Kingdom. After the impact of the low milk and pig
prices in 2016, it seems that the decrease in feed demand in both
the dairy and the pig sector is bottoming out. The demand by dairy
farmers for the recently introduced Feed2Milk concepts is
noticeably increasing. This has a positive effect on the gross
profit. In addition, more volume was sold in the pig sector to XL
customers, leading to on average lower margins. This forces us to
sharpen our commercial proposition, in order to achieve decent
returns.
In our supply chain we experienced a higher than
usual turnover of drivers which proved difficult to replace as a
result of many non-UK drivers leaving the United Kingdom due to
concerns around Brexit. This negatively affected the reliability of
the service to our customers. Improving this is our main priority,
and there are already signs of a strong recovery. Accordingly, our
operational costs were temporarily higher, resulting in a lower
underlying result. The roll-out of the supply chain optimisation
plans in the United Kingdom, as announced during the annual
results, is slightly delayed due to these developments. The opening
of the new factory in Exeter is planned for the fourth quarter of
this year.
One ForFarmers initiatives and others
In our
objective to help improve returns on the farm, the focus is on
delivering sustainable feed solutions and advice that lead to a
healthier herd and a more efficient production. Our sales advisors
continuously discuss items to improve with our customers. Based
thereon, new concepts are subsequently devised, developed and
tested before these are brought to market. As an example, recently
the new sow concept NOVA was introduced in all countries in which
we operate. This delivers a higher milk production per sow, more
piglets per litter, a higher weaning weight per piglet and a longer
life for the sow. In all of ForFarmers' countries of operation, the
concept was successfully tested simultaneously on multiple
thousands of sows and piglets on approximately 40 selected pig
farms. The development and roll-out of NOVA demonstrates the One
ForFarmers approach where knowledge is shared to improve the
returns on the farm and for ForFarmers.
Working capital developed positively, both due to
sharpened payment terms and to a further reduction in the overdues.
End of September, an amount of approximately €45.5 million was
spent on the share buyback programme. In the half year results
press release it was announced that the authorised maximum of €60
million for the share buyback programme will be fully used. In the
third quarter, fewer shares were bought back that in the previous
period.
This press
release contains information which qualifies
as inside information within the meaning of article 7, paragraph 1
of the EU Market Abuse Regulation.
Note to the editor / For additional information:
Caroline Vogelzang, Director Investor Relations and
Communications
T: 0031 573 288 194 M: 0031 6 10 94 91 61
E: caroline.vogelzang@forfarmers.eu
Company profile
ForFarmers N.V. ('ForFarmers', Lochem, the Netherlands)
is an internationally operating feed company that offers total feed
solutions for conventional and organic livestock farming.
ForFarmers gives its very best "For the Future of
Farming": for the continuity of farming and for a financially
secure sector that will continue to serve society for generations
to come in a sustainable way. By working side-by-side with farmers
ForFarmers delivers real benefits: better returns, healthier
livestock and greater efficiency. This is achieved by offering
tailored and Total Feed solutions and a targeted approach with
specialist and expert support.
With sales of approximately 9.3 million tons of
feed annually, ForFarmers is market leader in Europe. ForFarmers
has 2,273 employees and production facilities in the Netherlands,
Belgium, Germany and the United Kingdom. In 2016, revenues amounted
to over €2.1 billion.
ForFarmers N.V., Postbus 91, 7240 AB Lochem, T:
+31 (0)573 28 88 00, F: +31 (0)573 28 88 99
info@forfarmers.eu, www.forfarmersgroup.eu
FORWARD-LOOKING STATEMENTS
This press release
contains forward-looking statements, including those relating to
ForFarmers legal obligations in terms of capital and liquidity
positions in certain specified scenarios. In addition,
forward-looking statements, without limitation, may include such
phrases as "intends to", "expects", "takes into account", "is aimed
at", ''plans to", "estimated" and words with a similar meaning.
These statements pertain to or may affect matters in the future,
such as ForFarmers future financial results, business plans and
current strategies. Forward-looking statements are subject to a
number of risks and uncertainties, which may mean that there could
be material differences between actual results and performance and
expected future results or performances that are implicitly or
explicitly included in the forward-looking statements. Factors that
may result in variations on the current expectations or may
contribute to the same include but are not limited to: developments
in legislation, technology, jurisprudence and regulations, share
price fluctuations, legal procedures, investigations by regulatory
bodies, the competitive landscape and general economic conditions.
These and other factors, risks and uncertainties that may affect
any forward-looking statements or the actual results of ForFarmers,
are discussed in the last published annual report. The
forward-looking statements in this press release are only
statements as of the date of this document and ForFarmers accepts
no obligation or responsibility with respect to any changes made to
the forward-looking statements contained in this document,
regardless of whether these pertain to new information, future
events or otherwise, unless ForFarmers is legally obliged to do
so.
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: ForFarmers N.V. via Globenewswire
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