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Long-term value creation
In 2017, our Horizon 2020 strategy once again proved to be a good foundation for long-term value creation, for our customers and for ForFarmers, helping us to realise our ‘For the Future of Farming’ mission. We work side-by-side with our customers to improve both their success and that of the sector as a whole.
Our customers are continuously confronted with new challenges. Which is exactly why our nutritionists and specialists continuously work to further improve our Total Feed solutions for our customers: feed concepts that come with bespoke advice and tools. We help them achieve better on-farm returns with a healthy herd and greater efficiency. For example, during the year under review we were able to help our dairy cattle customers in the Netherlands with adapted feed solutions. This, as one of the phosphate reduction measures.
The combination of feed that is tailored to the customer’s needs and data analysis is becoming increasingly important for the entire sector. Scale is key to being able to offer this. What is more, the past year showed us once again just how important our production and logistics (supply chain) activities are. Because regardless of how good our feed and our advice is, we do have to be able to deliver it to the customer on time. This proved to be a problem in the United Kingdom in particular. The reliability of our services there has now been restored.
Partly thanks to our cooperative roots, we are acutely aware of the importance of maintaining good relations with our customers. To the extent, in fact, that we have launched a ‘Farming for non-farmers’ training for new colleagues especially in staff positions who do not have a background in farming.
The huge effort by our employees enables us to achieve our ambition and realise our commitment to our customers and shareholders. We devote a lot of time, money and attention to internal training to make our employees even better able to help our customers and further enhance the quality of our team. In this respect, scale and international in-house expertise are important pillars. For example, I look back with pride at the introduction of NOVA, the new concept for sows. Developed by our own Nutrition Innovation Centre (NIC) it was tested simultaneously by around 40 pig farmers in four countries. Our new colleagues from the acquired company Vleuten-Steijn also contributed significant knowledge and experience to the development of this concept.
Training, innovation, knowledge sharing and sustainability efforts make us increasingly attractive as employer to both current and future employees. This is borne out by the fact that the number of internal promotions increased again in 2017 and that we managed to attract considerably more people with less help from external agencies.
In 2017, Iain Gardner stepped down from the Executive Committee and as COO of ForFarmers United Kingdom. In the last years, Iain has worked to put ForFarmers more strongly on the map there, for which I wish to express sincerest thanks on behalf of my colleagues and myself. We are pleased that our colleague in the Executive Committee, Steven Read, will take over his position from 2018. He was the natural and logical candidate to become COO of ForFarmers UK. This in light of his broad experience, the successful implementation of changes in the ForFarmers organisation and the fact that he was previously part of the senior management team in the United Kingdom for many years. We are presently looking for a suitable successor for Steven in the role of Supply Chain Director.
Our social responsibility
We are acutely aware of our position in society. As a feed company we have an important role in ensuring an adequate supply of animal protein in a world with strong population growth.
ForFarmers has both the opportunity and the duty to make use of scarce raw materials in the most sustainable manner in the production of feed. Just like our customers, we operate in (relatively) densely populated areas with a lot of social pressure in terms of liveability and the environment. Which is why reducing our CO2 footprint, and where possible that of the parties in our value chain, is one of our most important sustainability objectives.
We focus on various fronts on diminishing the use of energy in our production and logistics. At the same time, we want to safeguard the quality and reliability of our feed supply. At times this can leave us facing dilemmas, about which we communicate openly. For example, we placed a new extruder machine in the factory in Lochem in the eastern Netherlands. This machine uses more energy but sees to a higher quality feed, which in turn leads to improved feed conversion and consequently less use of raw materials and consequently a lower carbon footprint in the whole value chain.
We are seeing society in general and consumers in particular placing ever-increasing emphasis on the origin of food, quality, animal health and welfare. We play a pioneering role in Belgium and in the United Kingdom by focusing on topics such as antimicrobial resistance (AMR) at meetings we organise to demonstrate to livestock farmers that animals can be kept healthy without medication being added to their feed.
Our mission and sustainability objectives are compatible with four of the UN Sustainable Development Goals, and we report on these in this annual report.
The health and safety of our employees is very important to us – on our own sites, in transit and at customers on-farm. In the past year we have seen safety awareness increase, but at the same time we recognise that there are further steps that we could and should take. Notwithstanding all the measures taken, accidents still can occur in exceptional circumstances. At the beginning of 2018 we sadly lost a colleague due to a fatal incident.
Results for our customers and shareholders
I started this statement by mentioning that our customers generally regained some financial leeway in 2017. In many cases they used this to buy performance feeds and to improve the technical results on-farm, in collaboration with our advisers. This proved to be succesfull.
In 2017 we achieved satisfactory results for our shareholders. We have achieved this whilst preserving our traditional core value: improving returns on farm. We are mainly proud of the organic increase in gross profit. This reflects the added value that customers attribute to our concepts, partly thanks to the efforts of our advisers.
The organisations in the Netherlands, Germany and Belgium made a significant contribution to the improvement. ForFarmers in the United Kingdom was faced with both difficult market conditions and organisational challenges. In the mean time we see the first positive results of the measures we have taken.
The constant focus on efficient working practices, our One ForFarmers programme, helped us achieve a rise in EBITDA and a decrease in working capital. This was supported by the contribution from Vleuten-Steijn, which we acquired in late 2016. The results mean that we are once again able to distribute an increasing dividend to our shareholders as well as making the desired investments as part of our Horizon 2020 strategy.
Looking back on the first full year of ForFarmers’ listing on Euronext Amsterdam I note that the share’s trading volume has risen sharply.
I am also extremely pleased that we have announced the acquisition of the poultry feed company Tasomix in Poland in early 2018. We herewith further extend our leading position in Europe and enhance our base with a fifth core country. A country that is, moreover, the largest poultry producer in Europe and has an above average growth. We expect to be able to close this transaction before the end of May, after approval of the authorities.
At the upcoming Annual General Meeting of Shareholders in April 2018 Jan Eggink will step down as Chairman and member of the Supervisory Board. Jan Eggink has been of great importance to ForFarmers during a period of historical decisions and important steps for the Company. His contribution to the creation and implementation of the strategy of ForFarmers and to securing the good relationship between the Company and the FromFarmers Cooperative and its members has been an essential one. On behalf of my colleagues and myself, I wish to expressly thank him for this.
I look back with pride on a year in which ForFarmers has once again strengthened the foundation for continued growth, For the Future of Farming. We would not have been able to achieve this without the tremendous effort and dedication of all our employees. I thank them heartily for this, on behalf of both myself and my fellow Executive Committee members. I also wish to thank our customers, shareholders, suppliers and other stakeholders for the trust they have placed in us. Together with all colleagues within ForFarmers, we work hard at living up to this trust every day.
Lochem, 12 March 2018
Yoram Knoop, CEO ForFarmers N.V.