LOCHEM, NETHERLANDS — ForFarmers, a European compound feed manufacturer based in the Netherlands, endured a challenging first half of 2023, as it registered declines in gross profit and underlying EDIBTA, according to an earnings report released on Aug. 10.

Compound feed volumes sold declined by 6% compared with the first half of 2022, to 2.99 million tonnes, while overall feed volumes sold fell by 4.8% to 4.3 million tonnes.

Gross profit fell by 8.7% to €234 million ($256.5 million), while a significant drop was seen in underlying EDIBTA for the first six months of 2023, declining 38.5% compared with the first half of 2022, to €26.5 million ($29.2 million). Revenue rose slightly compared with the first half of 2022, increasing by 0.6% to €1.6 billion, while operating expenses rose by 1.3% to €241.3 million.

Pieter Wolleswinkel, chief executive officer of ForFarmers, noted that increased price competition amid volatile market conditions, and reduced pig herds in several European countries put further pressure on the company’s volumes and on gross profit.

He said the company expects to bounce back in the last half of 2023.

“The answer to this challenge lies in implementing the strategy in which local responsibility with commercial flexibility and differentiated approach is the key,” he said. “The reorganization that this required is being implemented this year. The outcome is a given: fewer management positions and short lines to the customer.”

Wolleswinkel said ForFarmers expects to finalize the announced sale of its Belgium feed business to Polish company Piast in the second half of 2023 as part of its re-evaluation of various markets, which also included the cancelation of a joint venture between ForFarmers UK and 2Agriculture.

“Geographically, choices have been made,” he said. “The choices we have made in the Germany/Poland cluster are encouraging, as evidenced by the results, as is our choice of a differentiated approach to the ruminant sector in the United Kingdom. This underpins our confidence that the second-half year will be better than the first-half year, barring unforeseen circumstances.”

He said feed quality will continue to be the emphasis of the company, noting that it is “paramount in our offering to customers.”

“We use our knowledge of nutrition and are enforcing cost-savings programs to offer competitive selling prices in our local markets,” Wolleswinkel said.

It has been a challenging environment for EU compound feed producers the last several years. According to a recent FEFAC report, EU compound feed production for farm animals in 2022 was estimated at 148.9 million tonnes, a decrease of 3.8% compared with the previous year, mainly due to the spread of animal diseases, which significantly impacted the pig and poultry sector.

FEFAC market experts estimated that production will decrease further in 2023 to 146.8 million tonnes, a decline of 1.5%