While the company’s gross profit increased by 8.3%, its underlying EBITDA for the quarter was down by 17.3%, compared to Q3 2021.
The Dutch compound feed producer reported that it was unable to fully pass on the higher energy costs or the hike in inbound freight charges caused by the low river water levels in Europe.
Volumes in its Total Feed portfolio, which consists of compound feed, specialties, co-products, seeds, and other products such as forage, were down by 7.2%, with the biggest decline seen in the swine and layer sectors.
Commenting on the results, ForFarmers CFO, Roeland Tjebbes, said the increase in gross profit was not enough to cover ForFarmers’ higher operating expenses, which included energy costs that were roughly twice as high as a year before.
“This consequently resulted in our consolidated underlying EBITDA being a few million lower than a year earlier. On a quarterly basis this translates into a relatively high percentage. Excluding the higher energy costs, underlying EBITDA in the third quarter of 2022 would have been roughly the same as in the third quarter of 2021.”
Raw material prices
Raw material prices were somewhat lower than in the second quarter, noted the CFO. This was a positive development for most farmers, but the drop was not sufficient enough for pig producers to benefit, he said. “In general, they continued to produce at a loss.”
The Polish market proved relatively buoyant for ForFarmers in the quarter, with it reporting higher broiler feed sales there in the period. The ruminant sector in the Netherlands and the UK also performed well for the company.
Markets will likely continue to be volatile, said Tjebbes. “We remain committed to our customers and other stakeholders and will provide more insight into how we intend to continue to do so in the coming years on November 17.”
The feed manufacturer also hopes to provide more clarity soon, he continued, on the planned joint venture with 2Agriculture in the UK, with which it anticipates further strengthening its position in the poultry sector.