ForFarmers N.V.: ForFarmers third quarter 2017 Trading Update
(Thomson Reuters ONE) -
Lochem, 9 November 2017
ForFarmers third quarter 2017 Trading Update
Highlights third quarter 2017(1):
* Volume Total Feed: growth in all clusters
* Gross profit: growth (including negative currency translation impact Pound
sterling)
* Underlying EBITDA(2): 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
3(rd) 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(at)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(at)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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