This is evident from the progress report of the listed animal feed from the Achterhoek. The underlying operating result (EBITDA) in the first three months of this year is 12.8% lower than in the first quarter of 2020. Gross profit fell 2.8%. In addition, ForFarmers sold more animal feed (+ 1.8%) than in the first three months of last year and net turnover increased.
ForFarmers saw its gross profit in the Netherlands and Belgium still increase. Incidentally, this increase was entirely driven by takeovers, with the acquisition of De Hoop Mengvoeders on 1 February in particular contributing to this.
However, the gross profit increase was not enough to offset the decline in Germany / Poland and the United Kingdom. In Germany, however, the animal feed giant has concluded a number of contracts, the margins of which turned out to be poor. ForFarmers expects this to have a negative impact of € 4 million in the first half of 2021.
In the United Kingdom, gross profit declined due to intense competitive pressure. To relieve the pressure here, ForFarmers recently terminated a poorly performing contract with a large customer in the pig sector. This means that the group is not yet able to benefit from Brexit. Forfarmers CEO Yoram Knoop previously expressed the expectation that the animal feed company as the market leader with its own production and logistics chain will benefit from Brexit.
The animal feed concern also sees that the sector is slowly recovering from corona. Prices of dairy, meat and eggs have risen in recent months and are back at the level of a year ago before the outbreak of the pandemic, after being under considerable pressure from the corona measures.
However, the financial position of the farmers is not yet in order, which makes them more economical in their purchase of feed. In addition, ForFarmers is already suffering from rising raw material prices.
All in all, ForFarmers says it is not sure whether the decline in the underlying operating result in the second half of 2021 can be fully offset, because the corona measures will last longer than where the company expected. For the long term, however, the company from Lochem is satisfied.
ForFarmers is committed to its aim for an underlying operating result of between € 125 million and € 135 million in 2025 and an organic growth of between 0 and 3%. In addition, the company wants to limit operating costs of € 10 million.
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