ForFarmers’ UK business has reported increases in profitability and revenues in 2015, with volumes lifted by acquisitions. But like-for-like sales were down slightly, with the Dry, Most and Liquid (DML) feeds division seeing a profit fall.
The UK arm of the Dutch co-operative made an operating profit of €17.30 million on sales of €771.51m in the year ended December 31st 2015, compared to €16.34m and €748.64m in 2014. The year saw 3.06 million tonnes of feeds manufactured, a 6.4% rise from the 2.88m tonnes in the previous year. While like-for-like volumes fell by 1%, the overall increase follows the acquisitions of Wheyfeed and HST Feeds in 2014, plus the Countrywide Farmers feed volumes in early 2015.
The company says UK ruminant compound volumes fell by 4% due to poor milk prices, plentiful forage and the warm winter feeding period. But dairy straights sales were up by 2.5%. Poultry product volumes were 2% higher, while pig volumes were unchanged year-on-year.
A 16.6 % increase in operating expenses is attributed to the favourable exchange rate, worth 11%, as well as the acquisitions during the period which added €7.5m or 5.8%.
UK operating profit rose by €1.7m through currency effects and 0.8% (€100,000) by acquisitions, although partially offset by a €500,000 lower profit at the DML business.
The project to double the capacity of the Exeter ruminant feed mill to 300,000 tonnes is underway, and has cost €1.3m so far during 2015. The overall cost is expected to reach £10m, with completion scheduled for early 2017. The UK is also the first country market to benefit from the roll out of a new customer relationship management system which started in the UK in December 2015.
At Group level, ForFarmers returned an operating profit of €64.1m on revenues of €2.24 billion, respective increases of 1% and 2.4% on the €62.6m and €2.22bn in 2014. Overall feed manufactured volumes rose by 3.8% to 9.09m over the whole year. Ruminant and poultry species products increased, but pig products fell.
Russia’s continued ban on certain EU imports affected the European meat and dairy markets, while produces also found their costs rising due to regulatory changes over animal welfare and environmental sustainability. The need to improve production efficiency is seeing a drive to more scale and professional management, together with more advanced monitoring or technical and business performance, which are services offered by the company.
The ‘One ForFarmers’ programme to integrate all the legacy businesses in Holland, Belgium and the UK under the parent banner continues, with the rebranding under ForFarmers colours now complete and the new matrix organisation is almost in place. There are now company-wide formulation and procurement departments, management development programmes and knowledge sharing in production and logistics has shown benefits.
ForFarmers is also working in strategic partnerships with Nutreco in feed and Agrifirm in crop inputs as part of the Group’s Total Feed approach to increase margins through economies of scale. The year saw the first joint piglet nutrition concept – Vida – with Nutreco.
Looking ahead, there is no clear indication of when farm profitability will improve in Europe, notes the company. The geopolitical situation remains tense, with volatility of feed materials and currency markets expected to continue. Other causes of uncertainty are the UK’s referendum over EU membership, especially with regard to exchange rates, and legislation in the Netherlands to reduce phosphate emission that could restrict feed sales in the longer term.
"In a year with challenging conditions for the agricultural sector and our customers, I am pleased with the achievements of ForFarmers,” says chief executive Yoram Knoop. “Volumes, gross profit and profit all increased. With the ongoing implementation of Horizon 2020, the transformation from a local compound feed supplier to a leading international feed company is fully underway. Meanwhile, significant progress has been made and advantages have been realised with our strategic partnerships. In 2015 ForFarmers has strengthened its position, has further professionalised the organisation and is ready for the new challenges of 2016."