An expanding animal feed firm saw profits rise last year, in spite of tough conditions for some of its core customers.
ForFarmers, which has its UK base at Ipswich, also saw its total feed volume in the UK increase by 6.4% to 3.1million tonnes as a result of its acquisition of Countrywide Farmers in 2015 and Wheyfeed and HST in 2014.
Ipswich-based BOCM Pauls was purchased by the Dutch company, which has its headquarters in Lochem, four years ago and was rebranded under the ForFarmers banner two years ago.
Gross profits across the group, which has 2,370 employees based across the UK, Netherlands, Belgium and Germany, rose by 7.7% to 424million euros (£333m), while feed volumes increased by 3.8% to 9.1 million tons. Meanwhile, like-for-like profits growth was 1.8%, amid “very difficult” agricultural market conditions.
“Prices in the agricultural sector continued to be under pressure during 2015. Milk prices fell and prices for pig meat remained low. Egg prices increased slightly. As a result of the Russian import ban, a large European export market for meat and dairy products was unavailable. This resulted in significant negative margin pressure for many customers in the core markets of ForFarmers,” the firm said, adding: “The market trends to not provide clear indications when farm profitability will improve.”
In the UK, lower milk prices and the abundance of fodder last year due to the mild temperatures meant that on a like-for-like basis, feed volumes fell slightly by 1%. Volumes of pig feed remained almost the same, while the poultry sector saw a 2% rise.
A rise of nearly 15% in gross profits in the UK was “entirely driven by acquisitions”, the company said. However, in like-for-like terms, gross profit fell slightly by -1.4%.
“This decline was caused by the lower gross profit in the Dry, Moist and Liquid feeds (DML) segment. Both the ruminant and the swine/poultry business units showed an increasing gross profit due to the improved product mix including more specialties,” the firm said.
Farmers were facing added costs as a result of increased regulation, mainly aroud animal welfare and environmental sustainability, it added.
“This resulted in farmers focusing even more on finding solutions to improve efficiency on their farms and to enhance their margins,” it said.
ForFarmers is set to build a new £10m factory in Exeter which will doulbe the production capacity of its existing facility from 150,000 tonnes to 300,000 tonnes
A resolution proposing public listing of the company, is set to be considered at its annual general meeting on April 15.
Chief executive Yoram Knoop said: “In a year with challenging conditions for the agricultural sector and our customers, I am pleased with the achievements of ForFarmers.
“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 under way.
“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.”
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