Company also sees across-the-board increase in gross profit
ForFarmers reported a growth in total feed volume for the first quarter of 2018 – driven by growth in the Netherlands and Germany/Belgium – as well as across-the-board increase in gross profit.
Compared with the first quarter of 2017, total feed volume decreased in the United Kingdom, but volume increased compared with the fourth quarter of 2017. Volume growth in total feed, in terms of percentage, was higher than in compound feed. In the first quarter 2018, volume growth was driven nearly completely by organic growth.
Milk prices are declining as of the fourth quarter 2017 but are higher than last year around this time of year. Average European pig prices started to decline as of October 2017 and are lower than in the comparative period last year. Prices for broilers are higher than in the first quarter of 2017 and show a mild upward trend. Egg prices are also higher than a year ago, but have started to decline as of the beginning of this year. In the second half 2017 egg prices increased significantly due to a shortage of eggs after the Fipronil case.
Consolidated revenue increased primarily as a result of volume growth. Gross profit grew in all clusters, including a limited negative currency translation impact of the pound sterling. Gross profit improvement was realized particularly by the clusters Germany/Belgium and the United Kingdom.
Net profit increased due to an incidental gain from the sale of the arable activities (non-livestock feed related) to CZAV in the Netherlands, which was completed last February.
“Our first quarter results paint a varied picture,” said Yoram Knoop, CEO of ForFarmers. “Volume development is positive in all clusters and we are also satisfied with the improvement of our gross profit. Our underlying EBITDA showed a limited decrease due to, amongst others, temporary higher M&A related consultancy costs and increasing energy and diesel prices which we have not been able to fully pass on to our customers.”
One ForFarmers initiatives and others
It is expected that the reopening of the factory in Deventer, as announced in January, will take place at the beginning of the second half of 2018. This factory is being prepared to produce non-GMO and VLOG-certified feed for those dairy and goat farmers, whose products are mainly being exported to Germany where retail demand for non-GMO dairy products is increasing.
In February, the strategic partnership between ForFarmers the Netherlands and Baks was started successfully. This cooperation is aimed at making the value chain more efficient and is consequently completely in line with the One ForFarmers objective to be able to deliver the Total Feed solutions in an effective and efficient manner.
Due to changing circumstances in the ruminant sector, ForFarmers United Kingdom has recently started to combine the two existing regional ruminant sales organizations to one national organization.