Feed firm sees profits rise, but says farmers still under pressure

Iain Gardner, chief operating officer of ForFarmers, and Yoram Knoop, chief executive of ForFarmers,

Iain Gardner, chief operating officer of ForFarmers, and Yoram Knoop, chief executive of ForFarmers, at the re-branding of the BOCM Pauls name to ForFarmers at an event at the Farmers' Club in London on Monday, October 6, 2014 - Credit: Archant

Farmers are still feeling the pinch as the pressure on prices for milk, meat and eggs continues, an animal feed firm said as it published its results for the first half of 2016.

But Dutch firm ForFarmers, which has its UK headquarters in Ipswich, saw its operating profit rise 6.8% to 32.8m euros through an efficiency drive and its ‘Total Feed’ approach for customers.

Its revenue fell by 4.4% to 1,070.5m euros due to decreasing raw material prices and the devaluation of the sterling, but this was partly compensated by acquisitions.

Meanwhile, the volume of Total Feed increased by 2.9% to 4.6m tonnes, mainly driven by growth in the Netherlands and Germany/Belgium.

Gross profit excluding the negative currency effect remained “fairly stable” based on a positive contribution of the Netherlands and Germany/Belgium and a decrease in the United Kingdom, it said.

In July, it announced the acquisition of Vleuten-Steijn in the Netherlands to further strengthen its position in the swine section. The acquisition is pending approval of the competition authorities.

Chief executive Yoram Knoop said by focusing on improving the returns on farm with its Total Feed approach, the volume of feed that farmers bought had increased.

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“In the first half year farmers were still facing challenges due to continuing pressure on prices for milk, meat and eggs,” he said.

“The acquisition that we made in the United Kingdom last year (of Countrywide) also contributed to our result. Both in macro political and macroeconomic terms, the first six months of 2016 continued being restless with the Brexit as the most significant event.”

The weakening of sterling had an adverse effect on its results, which are given in euros, he pointed out.

“In these challenging circumstances we were able to improve our underlying Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), largely through the implementation of our efficiency programme One ForFarmers.”