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Danish Agro group achieves its highest turnover and biggest profit ever

31-01-2017

The group has achieved the highest turnover ever, coupled with our biggest profit ever.

Danish Agro group became an even stronger partner for the thousands of farmers who trade with us in 2016. The group has achieved the highest turnover ever, coupled with our biggest profit ever. Furthermore, we have consolidated our position as the sixth biggest agribusiness group in Europe. 

The group made significant progress in terms of its structure and organisation in 2016. Our position on the Swedish market has been significantly strengthened by acquisitions. Our activities in Denmark, Finland and the Baltics have yielded impressive results, and due increased activity we have invested considerably in improved logistics and warehouse facilities in several countries. Our machinery division was boosted by the deal with CLAAS and start-up of machinery sales in Denmark, Norway and Sweden. Premix and vitamin activities via the Vilomix group have gone well thanks to acquisitions in Poland and Norway and the start-up of activities in Asia. The group's hatchery activities in the form of DanHatch were reinforced by expanded facilities in Finland and Poland. All these moves have consolidated the Danish Agro group's competitiveness moving forwards, and coincided with realising all our financial targets for the year.

The Danish Agro group realised pre-tax profits of  84 million EUR for 2016, the best result to date, 3 million EUR higher than 2015, an improvement of 3.8%. Pre-tax profit gave a return on the group's equity at the beginning of the year of 15.1 %. 

Turnover in 2016 was 4.2 billion EUR compared to 3.8 billion EUR in 2015, an improvement of 10.8%, which should be seen in the light of declining prices and low harvest in 2016. Growth has primarily been due to the increase in turnover at Ceravis AG, consolidated for the whole year, and the acquisition of agribusiness activities in Kalmar, Sweden, consolidated for 10 months. After tax, Danish Agro realised a surplus of 72 million EUR, which increases the group's equity at the beginning of the year by 13%. Consolidated equity rose by 37 million EUR from 555 million EUR to 593 million EUR. The consolidated solvency ratio comprises 30,1% compared to 30.0% last year. 

Danish Agro's CEO, Christian Junker, is extremely satisfied with the year:

"2016 was a difficult year for many farmers at home and abroad, and Danish Agro had to react to an industry under pressure, facing difficulties on many markets. Some of the group's subsidiaries also had problems achieving profit last year, given which, I find it very positive that we achieved the financial targets we had set. We are now in a strong financial position, providing a springboard for future development.

We maintain constant focus on creating value for farmers. It's their needs that we have in mind when making investments abroad. The strength of the group's purchasing power is the key to competitive prices for them. And it's their needs that we have in mind when we started our CLAAS machinery sales up in Denmark, Norway and Sweden. Such activities will help ensure that we can meet the needs of modern agriculture. We seek to maintain the right balance between international strength and local presence, and I believe that we have a solid foundation on which to build."
 

Stronger international collaboration
2016 saw Danish Agro consolidate its position as one of the two biggest and most important agribusiness suppliers to the farming industry around the entire Baltic.

The Swedish competition authorities approved our acquisition of Kalmar Lantmän in February, which enabled our subsidiary Swedish Agro AB to become the third-biggest agribusiness company in Sweden with its head office relocated to Kalmar. Our stronger presence on the market has meant more competition, to the benefit of Swedish farmers. We are well down the road to exploiting synergies, expanding our market and offering even more products and services to make us the best possible partner. We end 2016 with an even stronger result than forecast.

In contrast, the German agribusiness market has had problems and Ceravis AG has struggled to achieve respectable results. The problems have been larger than expected, and it's taking longer to determine direction and implement the necessary adjustments, and our execution could have been better. Consequently, the company made a loss in 2016. The management and employees of Ceravis are working hard to turn things around in 2017.

Early in 2016, the group signed an exclusive importer agreement with CLAAS on distribution and sales in Denmark, Norway and Sweden. We worked hard during the year to be ready for the first machines to be sold in Norway and Sweden in October 2016. A total new organisation was built and the branch structure is starting to take shape in both countries. In Denmark, we acquired import company LMB A/S in Fredericia, which changed name on 1 January 2017 to Danish Agro Machinery A/S. There are considerable gains to be made from economy of scale in machinery sales, and we believe that we can contribute to the structural changes faced by the industry. We see vast potential for our Nordic customers.

Danish Agro's Chairman of the Board, Jørgen H. Mikkelsen, is very satisfied with the objectives the Danish Agro group achieved in 2016:

“The supervisory board of Danish Agro and I are highly satisfied with the way the group has managed to become an even stronger partner for our customers and owners in 2016. The group consolidated its position during the year as one of the biggest and most important agribusiness groups in Europe. Such a position is vital for the group to deliver healthy profit, and be a respected partner for its customers and suppliers. There are a lot of farmers under considerable pressure on our markets. That means a lot of work to keep things together and we are therefore delighted to see how 'our' farmers benefit every single day from the fruits of the growth and internationalisation the group is experiencing. I believe that we have found the ideal way to create value for farmers," claims Mikkelsen before expounding:

"I am also delighted that we can once again reward our members in the form of dividends this year thanks to a good result. Being able to do so is a goal in itself when the right economic circumstances are present, given that we are a cooperative,” he concludes.
 

Projections for 2017
The Danish Agro group will continue to focus on expanding its machinery sales business in Denmark, Norway and Sweden. That will mean that costs will run ahead of earnings in the short-term and we expect continued costs from restructuring on the German agribusiness market. Nevertheless, we expect turnover of around 4.4 billion EUR in 2017. The group is aiming for pre-tax profit of around 81 million EUR after depreciation and amortisation of around 67 million EUR. The group's balance sheet is expected to show around 2.1 billion EUR. Equity will be increased to the level of 644 million EUR, corresponding to a solvency ratio of 31%.