Result 2015: Focus and Acceleration produce solid results and a strong balance sheet

08 mrt 2016

In 2015, Koninklijke Coöperatie Agrifirm realised a net income of € 76.2 million. The sales volume of animal feeds and products for the plant-based sector experienced a positive trend. The initiated strategy, with a Focus on core activities and Accelerated result growth, was vigorously continued in 2015. The investment efforts, the implemented improvements in efficiency and the transformation of the organisation have made positive contributions to the result.

  • Sales volume on Dutch compound feed market rises by 100,000 tonnes.
  • Ongoing growth in arable farming market, for example a 2 percent growth in sales volume of crop protection products.
  • Successful acquisition of Nutrifarma (Brazil) by Nuscience.
  • Strong improvement in operational income.
  • High one-time exceptional income from the sale of interest in Plukon.
  • Net result up to € 76.2 million (2014: € 3.1 million).
  • Solvency increased from 51.6 percent (2014) to 52.0 percent.
  • Member Dividend and Member Discount increase from € 14 million (2014) to € 20 million.

A clear focus on innovations and continued improvements within the operation yield benefits for customers and provide a solid basis for growth and market share. Based on its Dutch Farming vision, Agrifirm uses its knowledge, products and advice to help Dutch livestock farmers and growers to establish and further strengthen their top positions in the world.

Market Trends

From a geopolitical perspective, 2015 was an eventful year. The unrest in the  Middle East, Africa and Ukraine also affects the markets in which Agrifirm operates. The boycott of Russia has further intensified the crisis due to lower selling prices than acceptable in the pig farming sector. Furthermore, the unrest caused major currency fluctuations.

In the Netherlands, the abolition of the milk quota system resulted in an increase in the dairy herd. The growth in the compound feed sales volume remained limited, in part because milk production only substantially rose in the second half of the year and partly because there was an ample supply of roughage. Aside from this, the government developed additional phosphate-related laws and regulations that slowed growth. The price issue in the pig farming sector slowed the sales volume in this sector. Prices in the broiler farming and plant-based sectors were reasonable to good. Unfortunately, the expected recovery of the egg sector only persisted to a limited extent.

Member companies

The member company Agrifirm Feed experienced a 100,000 tonnes increase in its sales volume. This caused Agrifirm Feed’s market share in the Netherlands to continue to grow. The innovative feed concepts Gemengd Voeren 2.0, Ruwvoer Totaal®, SALDO MELKEN and TopStart® made a significant contribution in this respect. In face of the pressure felt within the pig farming sector, this sector was supplied with a new product range of meat pig feed that resulted in lower feed costs per kilo of meat.

Due to the late start of the spring, the growth season was shorter than average, causing Agrifirm Plant’s revenues to be lower. In spite of this, the company achieved a 2 percent increase in crop protection product revenues.  Agrifirm’s cereal pool prices were above average payout prices in the Netherlands. The logistics restructuring was completed at Agrifirm Plant and the From-the-Farm concept for the collection of cereals proved to be efficient. With the introduction of concepts such as NemaDecide Geo, Transformer and the use of eBee for creating Geo maps, Agrifirm Plant continues to further develop its leading position in precision agriculture and soil health.

European Agrifirm companies

The Agrifirm Feed companies outside the Netherlands performed well. Agrifirm Belgium realised an increase in its sales volume of over 10 percent in the laying hen poultry farming sector. It is a remarkable achievement, while the egg contracts continued to be phased out in accordance with agreements. With concepts such as VIGOR, laying hen poultry farmers proved to be convinced of the added value of Agrifirm’s concept-based approach. This in turn attracted new customers.  The clear focus on cost control and efficient production and logistics also contributed to the positive result in the pig farming sector. Both Agrifirm Polska and Agrifirm Magyarország (Hungary) managed to achieve a higher sales volume, as well as improved financial results. A constant high feed quality, new concepts and being more in control proved to be the success factors.

Cost reduction, focus on core activities and an effective customer approach produced a positive result at the feed company Agrifirm Deutschland. Compared to 2014 a major improvement. The development of the plant activities is lagging behind.

In spite of a difficult season, BV Oldambt achieved an acceptable result. Export orders for dried roughage outside Europe were a significant contributing factor in this respect.  Following the divestment of its operation in the United Kingdom (2014) and the termination of its operations in Germany, Agrifirm Co-products achieved a positive result. Greater synergy between Agrifirm Co-products and Agrifirm Feed is resulting in a higher sales volume of wet by-products in the Netherlands. In 2015 the wet compound feed concept for cattle experienced a definite breakthrough with Proti+ and Gluco+.

Specialties

Nuscience experienced various developments. Two new factories were opened: one in Drongen (Belgium) and one in Tianjin (China). Due to the successful acquisition of Nutrifarma in Brazil, Nuscience, experienced significant growth. As a result, this accelerated the expansion of Nuscience. While the difficult conditions experienced by the pig farming sector in China as well as Europe slowed development, the sales volume nevertheless grew. Exchange rate fluctuations affected the results, particularly in Ukraine and Brazil. Nuscience nevertheless achieved an excellent result and made a significant contribution to the result of the Agrifirm Group.

Knowledge & Innovation Cluster

Within the Knowledge & Innovation Cluster, Agrifirm Exlan as well as NutriControl had an excellent year. Agrifirm Exlan is increasingly becoming a valued consulting partner for farmers. For NutriControl, the conclusion of a contract with Fonterra was a highlight in 2015 .

Agrimec, Agri Retail and Agrifirm Winkel BV

In spite of the decline in the market for new tractors, Agrimec managed to achieve a satisfactory result, in part by means of solid sales in other market segments.  Agri Retail and Agrifirm Winkel BV both managed to achieve excellent results. The focus on the Welkoop brand, bringing the procurement of animal feed and animal accessories in-house and a clear focus on cost control were the key reasons for this development.

Focus and Acceleration

As an international organisation, Agrifirm wants to be leading in the agriculture and horticulture sectors. In 2015 Agrifirm accelerated the initiated strategy focused on its core activities: compound feed, arable farming and horticulture, co-products and specialties. This was given an extra boost by investments in the compound feed production sites in Oss, Drachten and Veghel (the Netherlands) focused on improving efficiency, expansion of capacity and specialisation. In terms of the plant-based sector, the Emmeloord site (the Netherlands) was entirely renovated and the logistics reorganisation was completed. The central cereal storage facility in Kampen (the Netherlands) was used at full capacity in 2015.  The interest in Plukon was virtually entirely sold, which resulted in a considerable one-time benefit. At the end of 2015, BayWa announced its intention to acquire Agrifirm’s interest (51%) in Agrimec’s mechanisation operations. The process to realise this sale has been started in the beginning of 2016.

Members’ Interests first and foremost

Agrifirm’s balance sheet position continued to improve. Solvency rose to 52.0 percent. A great deal of attention devoted to working capital management and competitive procurement contributed to this, as did the one-time incidental sale of the interest in Plukon.  On the basis of Agrifirm’s strong equity position and its operating result, the Member Dividend and the Member Discount rose to € 20 million, an increase of € 6 million over 2014. The Member Dividend 2015, which members accumulate in 2016, was increased to 1.0 percent. This cooperative approach differentiates Agrifirm from other major players in the market.

Dutch Farming vision

Due to the clear focus on innovations and continued efficiency improvements within the operation, Agrifirm contributes to achieving top performance on the farm. Agrifirm stands for future-proof, groundbreaking food production to scale and size, in harmony with the living environment. Agrifirm summarises this vision under the name Dutch Farming, whereby all products, concepts and the innovations that are introduced are focused on three themes: ‘Smart feeding’, ‘Healthy soil, plants and animals’ and ‘Strength in the chain’. Agricultural knowledge development and making this available to customers by means of innovative products and concepts remain an Agrifirm spearhead. Agrifirm wants to put the agricultural sector on the map even better this way.

Annual Report and Annual Review

Around 11 March 2016, members will receive the Annual Review, a special publication about the results achieved by Agrifirm in 2015.