Agrifirm sees increase in net earnings

By Jane Byrne

- Last updated on GMT

© GettyImages
© GettyImages
Despite a slight decrease in revenue, Dutch feed and agribusiness group, Agrifirm, saw its net profit grow by 14.6% in 2018 to €44m (US$49.8m).

It released its FY2018 financial results today.

The members of the cooperative benefitted from the profit increase, as the dividend rose by €3m to €28m, said the group.

Dick Hordijk, CEO Agrifirm, noted that the amount Agrifirm has paid its members has steadily increased in recent years.

The company, which produces animal feeds, premixes, concentrates, mineral mixes, feed additives, crop cultivation products, and provides services to the agricultural sector, said its financial position is now extremely strong with 58.4% solvency and an excellent liquidity. Investments and depreciation are well balanced, it added.

Its financial results were good, it continued, given the pressure on the cattle and pig farming sectors, particularly in the Netherlands, and the global trade war and animal disease issues.

The volume of compound feed it sold decreased by 5.6% to 3.6m tons, but more by-products were sold. Agrifirm does not make a distinction per country or animal category. This makes it unclear in which countries or species areas there was a reduction in feed sold, but sales in its home market must have taken a hit with both the cattle and pig population in the Netherlands having reduced in size last year.  

Market challenges

Agrifirm said, outside of the Netherlands, the meat scandal in Brazil and the outbreak of African Swine Fever (ASF) in China put pressure on its customers. It noted that the trade war between the US and China resulted in higher costs due to import levies and in some cases due to the inability to deploy products.

Those challenges reduced company turnover, it reported. “However profitability was maintained by focusing on large professional customers, improving margins and cost control.”

In Brazil, sales volumes continued to lag, it said. The devaluation of the local currency impacted Agrifirm’s results negatively. It said its JV in Ukraine performed well, in part “due to the growth of its position in the cattle sector, from which we were able to profit after many years of investment and hard work.”

It said exports to the Middle East and Africa continued to grow.

Takeovers, new alliances

The Dutch player said it made a number of new acquisitions and joint ventures in 2018.

To strengthen its business operations in Africa, it established a JV in Algeria with Diam Grain in March 2018.

“Together, we are constructing a premix plant in Algeria to support the fast-growing local feed industry and to reduce dependence on European imports.”

In June 2018, it acquired​ Special Nutrients, a global leader in the field of mycotoxin binders, in the US, to bolster its standing in functional feed ingredients.

It noted that at 32%, ​the organic growth in sales volume in Poland last year can "only be qualified as nothing but spectacular." ​Agrifirm has been building its business in that market.

In 2017, Agrifirm went on the asset trail​ in Eastern Europe, buying Bacutil in Poland, then citing the growth in Central and Eastern Europe as a key strategic priority and the rationale behind the move. That deal saw it get almost nationwide coverage in Poland, edging Agrifirm towards pole position in the compound feed producer rankings for that market. The move followed the July 2016 acquisition of Polish compound feed player, Paszmark, which serves the poultry, pig and cattle production sector and is located in an area of high animal density, in Płosnica, near Żuromin.

The company said it also acquired the customer portfolio of Veevoeders Vanhengel, a supplier of pig feed, last year. “Production now occurs in our compound feed plant in Belgium.”

In November last year, Agrifirm also announced a strategic tie-up​ with insect protein and oils producer, Protix. The alliance will collaborate on a range of new initiatives using insect-based ingredients in products for the broiler, layer and pig sectors in the Netherlands, and beyond, as well as targeted applications for soil improvement.   

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