Restructuring to create greater focus and growth in core activities

18 mrt 2015

Agrifirm realised an operational income of € 26.9 million in 2014. This is evident from the annual report published by Koninklijke Coöperatie Agrifirm U.A. today. The sales volume of animal feed and arable products shows a positive trend. Innovative products and concepts supplemented by professional advice are producing benefits for the customer and provide a solid basis for growth in market share.

  • Further growth in Agrifirm Feed and Agrifirm Plant market leadership in Dutch market.
  • 3% growth in volume of compound feed brings Agrifirm’s sales volume of animal feeds to 7.1 million tonnes.
  • Strong growth in volume in the plant sector, sales volume of fertilisers grows by 14% and crop protection products by 10%.
  • Nuscience Specialties division evolves successfully worldwide and achieves a 4% growth in volume.
  • One-time € 11.7 million restructuring costs open the way to growth in result of core activities. These costs have a downward effect on 2014 net profit.
  • Solvency rises from 48.6% to 51.6% due to effective working capital management, disinvestments and lower prices for raw materials.
  • The Member Dividend and Member Discount distributed to members rises from € 12.8 million to € 14.0 million.

In line with the refined strategy, Agrifirm completed a number of restructuring initiatives. A one-time provision of € 11.7 million was made for this. These adjustments are resulting in a greater focus on core activities and make growth in these core activities possible in 2015 and beyond. However, the adjustments resulted in a one-time lower net income of € 3.1 million.

Market Trends

In the arable sector, 2014 was characterised by a relatively long growing season. International tensions contributed to low revenues and pressurised incomes in several vegetable and animal sectors.  The total sales volume of compound feed rose by 3% in comparison to 2013, whereby the largest increase occurred in the broiler farming sector. The sale of co-products declined somewhat, as a result of which the total volume of animal feeds was 7.1 million tonnes, slightly more than in 2013. The Agrifirm Feed division grew its market share in the Netherlands and in other European countries. Innovative concepts such as Mixed Feeding 2.0, Roughage Total, Feed Profit, VIGOR and WellCome made a significant contribution in this respect. These Agrifirm concepts are making a contribution to the improvement of results achieved by livestock farmers in numerous areas, such as growth, feed efficiency, animal health, sustainability and the financial result.  Due to the extended growing season that characterised 2014 and due to the growth in market share, the sale of fertilisers and crop protection products significantly rose by 14% and 10%, respectively. The turnover of cereals, potatoes, onions and carrots declined by 11% to 612,000 tonnes. This was largely due to a reduction in acreage. The new logistics concept and the from-the-farm collection of cereals resulted in considerable cost savings.  Agrifirm Plant’s leading position in precision agriculture and soil health and the new ‘art of fertilising’ concept made an important contribution to the results achieved by growers. On this basis, Agrifirm Plant managed to further expand its market share in the major product groups fertilisers, sowing seeds and crop protection.

The Agrifirm Feed companies abroad achieved a stable to higher sales volume. A gain in customers was in particular achieved in the professional livestock farming sector through means of the deployment of innovative feed concepts. The operating incomes were in line with expectations, with the exception of Agrifirm Deutschland, which suffered from difficult market conditions.

Nuscience, which operates in special feeds throughout the world, experienced a good year. All of the company’s activities made a positive contribution to achieving this result, including the acquisitions made in recent years. Considerable investments in the production sites in Belgium and China make continued strong growth possible over the coming years. In 2014, Nuscience expanded its 51% interest in the Serbian business unit to 100%.

The Co-products division experienced disappointing results. The sales volume of wet as well as dry co-products declined by 5%. Due to the high roughage yields in the cattle farming sector, the sale of co-products in this market was difficult. Heavy competition on the purchasing side as well as on the sales side was responsible for a highly disappointing result.

Restructuring to create greater focus and growth in core activities

Agrifirm will be strategically focusing on its four core activities: compound feed, arable farming and horticulture, co-products and specialties. Supplemented by a professional knowledge & innovation cluster as the ‘engine’ for knowledge development and product innovation. In line with this refined strategy, the minority interest in Holland Malt was sold in 2014. In terms of the other companies and participating interests that fall outside the core activities, a review will be conducted to determine the possibilities available to strengthen the position of these companies. In addition, significant changes were implemented in the Co-products division in the United Kingdom and Germany and at Agrifirm Deutschland. Adjustments within both companies were necessary to anticipate changing market conditions and to improve profitability. The loss-making activities in the United Kingdom and Germany were terminated within the Co-products division. The entire organisation was significantly downsized in order to reduce costs. With these changes, the expectation is that with the profitable activities in the Netherlands, France and Romania it will once again be possible to achieve good results effective from 2015.

Effective 1 January 2015, Agrifirm Deutschland was split up into a Feed company and a Plant company and both companies were restructured. The split makes it possible to better focus on costs and revenues. In addition, this makes it possible to more quickly anticipate specific markets and to better exploit synergy with the Dutch Feed and Plant companies.  Total restructuring costs within Agrifirm amounted to € 11.7 million. This takes us down the path of greater focus and growth in result and volume in core activities in line with the strategy formulated by Agrifirm. Due to these one-time exceptional charges, the net income for 2014 amounted to € 3.1 million.

Further improvement in balance sheet position

Agrifirm’s balance sheet position continued to improve. Solvency rose from 48.6% to 51.6%. A great deal of attention to working capital management, the sale of the minority interest in Holland Malt and the lower prices of raw materials resulted in a lower balance sheet total and higher solvency.

Making the success of our livestock farmers and growers possible

In April 2014, Agrifirm initiated the campaign ‘in cooperation with’, with the objective of displaying the pride in the magnificent quality products produced by our livestock farmers and growers. The professional, enterprising and sustainable way in which Dutch livestock farmers and growers produce is a trendsetting example worldwide. With this campaign, Agrifirm aims to make a contribution to reinforcing the image of the agricultural sectors. By investing in research and development of new products, concepts and advice, Agrifirm makes an active contribution to the further expansion of the leading position of its customers.

Member interests a priority

On the basis of Agrifirm’s strong equity position and the operating results, € 14 million will be distributed to Agrifirm’s members via the Member Dividend and the Member Discount, € 1.2 million more than in 2013.  This cooperative approach differentiates Agrifirm from other major players in the market.

Annual report

At the end of March, members will receive the Annual Review, a special publication about the results achieved by Agrifirm in 2014.