Compound feed group ForFarmers sees sharp fall in profit

The group posted full year results today with a sharp decline in net profit – a fall of nearly 41% - from €52.7 million in 2012 to €31.1m in 2013.

Turnover of ForFarmers, one of the largest feed companies in Europe, jumped by 29.5% to €2.6 billion, due in the most part to the acquisitions of compound feed supplier Hendrix and the UK feed company BOCM Pauls.

“The increase in turnover was particularly strong in the UK, with a rise of 15.3%,”​ noted the feed manufacturer.

Increases in scale in pipeline​

Yoram Knoop, CEO of ForFarmers said that 2013 was largely dominated by the integration of Hendrix and BOCM Pauls.

“Underlying turnover and results proved to be relatively robust and were in line with expectations, despite the challenging market conditions. We further strengthened our financial position, partly due to more effective working capital management and the proceeds from the sale of Cefetra.”​

The Dutch group said it is aiming to capitalize on its market-leading position in compound feed to respond to the growing demand from clients for increased feed efficiency.

“​This will require further internationalization and increases in scale, in combination with our focus on operational excellence, which together will enable us to offer our clients the very best price/value ratio and to continue investing in know-how and innovation,” ​said Knoop.

Organic feed demand​

Turnover from organic compound feed is still modest, but increased in 2013, said ForFarmers.

Last year saw the Dutch group convert the former Hendrix plant in Lochem into a specialized production facility for organic compound feed with extra capacity to “enable ForFarmers to respond more effectively to the increasing demand for organic food.”​

The company reports that the beef cattle sector in general along with the UK pig farming sector are in a stronger position but it forecasts that there will be ongoing high volatility in raw materials prices, which will continue to have an impact on the margins of clients and ForFarmers in 2014.

To improve the effectiveness of the organization, the Dutch group said its board has expanded from six to nine people. It is also bolstering its team in other areas, such as marketing and innovation, purchasing and policy formulation, operations and supply chain.

Strategic alliances​

ForFarmers said it also plans to “increase its focus on forging and expanding strategic alliances with partners and joint ventures with universities and research institutes.”​

The company, with 40 production sites for compound feed in the Netherlands, Belgium, Germany and the UK, is majority owned by a cooperative.

There were no further announcements about the possibility of the feed group going down the initial public offering (IPO) route, a move provisionally agreed by the cooperative last November.