ForFarmers net profit down 70% in 2019

ForFarmers net profit down 70% in 2019

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CEO cites consequences of an unfavorable purchasing position

ForFarmers N.V. saw total feed volume in 2019 rise but its gross profit declined.

Total feed volume was up 0.7% to 10.1 million tons, but there was a like-for-like decline (-2.9%), especially in the second half of 2019 (-4.0%). Compound feed volume was up 1.9% to 7.1 million tons, but also saw a like-for-like decline (-3.2%), especially in the second half (-3.9%).

Gross profit was down 0.6% to EUR440.7 million (US$493.2 million). Underlying EBITDA was down 11.6% to EUR88.5 million. Underlying earnings per share were down 36.2% to EUR0.37.

Net profit was down by 69.8% to EUR17.7 million, due to, among other things, goodwill impairment United Kingdom (EUR25.6 million)

“2019 was a difficult and turbulent year for us,” said Yoram Knoop, CEO ForFarmers. “We were faced with the consequences of an unfavorable purchasing position as a result of which the first-half 2019 result was severely put under pressure. We have since further tightened our purchasing procedure in order to minimize the chance of such a risk recurring. In the second half of 2019, we realized better results despite further like-for-like volume decline due to challenging market circumstances in all countries except for Poland. This was, among other things, due to the implementation of our efficiency plans, which included the closure of five mills. We are well on track with the realization of the earlier announced EUR10 million cost saving in 2021 (compared to 2018).

“The integration of the four companies which we acquired in 2018 has been completed,” Knoop added. “Our market positions have been strengthened through these acquisitions. We are pleased Tasomix’s volumes are increasing in the growth market Poland. Consequently, our market share in the growing European poultry sector is expanding. Volume development in the United Kingdom is slower than anticipated, which is why a goodwill impairment was required. Finally, we have improved our operational cash flow through our continuous focus on working capital. In addition, we are pleased to have significantly reduced the LTIs (lost time incidents).”