Home 190508 ForFarmers | Looking beyond H1-19
190508 ForFarmers | Looking beyond H1-19

190508 ForFarmers | Looking beyond H1-19

No. pages 50




Strong performance and results since listing were halted in H2-18
ForFarmers recorded disappointing results in 2018 as it was unable to fully pass on higher logistics (in-, and outbound), energy and raw materials costs to farmers, its customers. This was particularly a challenge in the Netherlands and Poland. Unfortunately, a new challenge emerged as at the 2018 results presentation on 13 March the company guided for a strong decline (suggesting -20% to -30%, we estimate) of its underlying EBITDA in H1-19 versus H1-18, due to 'current purchasing positions in combination with the focus on sustaining market share'. At the Q1-19 update on 2 May, the company further detailed and specified this guidance to a y-o-y drop of -30% to -35%. As the implementation of IFRS 16 will have a one-off positive impact on underlying EBITDA, actually the drop in H1-19 y-o-y is even in the -35% to -40% range, we estimate. Consequently, the positive trends since the listing on Euronext in 2016 on the back of pleasing results in 2016, 2017 and H1-18 were 'suddenly' halted following a softish H2-18 and the guided warning for H1-19.

Road map of our report
Hence, we believe it is worthwhile to dive deeper into the various price trends, from raw material prices at the start up until animal protein prices at the end of the value chain. In addition, we analyse market and industry developments in ForFarmers' active countries. Moreover, we look at the company's results and actions during the broader 2014-2018 period. Specifically we focus on the contributions from foreign currencies, net acquisitions and the company's like-for-like (l-f-l) progress with regards to volumes, costs and profits. Next we dive into the (differences in) performance(s) of the company's 3, geographically defined, clusters; the Netherlands, the Germany/Belgium/Poland cluster and the UK. As the latter's results have been softening up until 2017, we take a closer look at the challenges and ForFarmers' actions in its second largest market. We also focus on the company's acquisitions, mostly notably Polish Tasomix. The latter will strengthen not only ForFarmers' growth profile, but also enjoys attractive profitability ratios. Lastly, we finish our report by providing the building blocks for our estimates going forward. We conclude this report with the relevant valuation multiples and our investment view.


Table of contents

  1. Introduction and profiling ForFarmers
  2. A deeper loock at prices, from raw materials to animal proteins
  3. ForFarmers strengthened its positions in its current 5 markets
  4. EU feed market is mature, but growth prospects differ per country
  5. ForFarmers' scorecard a mixed one since its listing on Euronext
  6. Diving into the KPIs, country by country
  7. Looking beyond H1-19
  8. Appendix: Estimates and DCF




Created Date: Wednesday May 08, 2019 17:03:30
Last Updated Date: Wednesday May 08, 2019 17:03:30
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