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The Horizon 2020 strategy has clearly made a contribution to our good results. We have seen progress in the four core areas of our strategy, in which our core values of ambition, sustainability and partnership are the driving force.
Our customers were again in 2016 faced with difficult and volatile market conditions. Around the middle of the year, prices, particularly for milk and meat, were really low in all countries. During the year, these prices have recovered slightly but not yet to such a level that enabled healthy business results for (cattle) farming. We have continued to focus on helping to improve farmers’ returns, by offering sustainable solutions combined with advice. This has resulted in good improvements in the underlying EBITDA* for ForFarmers in the clusters the Netherlands and Germany/Belgium. In the United Kingdom volume sales fell as, besides low prices for agricultural products, there is also uncertainty amongst farmers as to the consequences of Brexit. Furthermore, the devaluation of the Pound sterling has had a negative effect. Both these effects resulted in a decrease in the local underlying EBITDA. ForFarmers Group reported an improved EBITDA.
In order to reinforce the Total Feed approach in the United Kingdom, we decided to streamline the organisation by fully integrating the four acquisitions of recent years, both as regards the range of products and the working methods. This opens the way to offering all customers a total solution, in an efficient and unambiguous way. The One ForFarmers efficiency programme, which is being implemented in all clusters, is of great importance to the improvement of the results. Moreover, the two acquisitions, being the feed and forage activities of Countrywide Farmers (2015) and VleutenSteijn (2016) have had a positive effect on results.
* 'Underlying EBITDA' is operating result excluding depreciations and amortisation and excluding incidental items
For the Future of Farming
In 2016, we launched our mission ‘For the Future of Farming’ , with which we show that we believe in the future of the agricultural sector in Europe. We continue to devote all possible efforts to the continuity of the farming business and sustainable food production. We do this by working side by side with our customers to ensure healthier livestock, higher efficiency and better returns on farm.
The Total Feed approach is essential to our mission and strategy. We offer each customer integrated (feed) solutions during the entire production cycle, tailored to the situation of each farming business. By sharing know-how, important steps were made in the optimisation and harmonisation of the product portfolio in 2016. By integrating the DML activities in the country organisations it is easier to offer our customers the total feed solutions. We are delighted that our advisors’ work was rewarded during the year as in September, the Dutch trade journal V-focus stated that ForFarmers provides the best advice to farmers.
It is important, to us and our customers, that we continue to make optimal use of our scale and efforts. One ForFarmers was set up especially for that purpose. One brand, one way of working, one customer relationship management system, one approach and sharing and utilising knowledge and skills. This professionalization was further continued in 2016 with aspects such as the rollout of internal Academies for our employees. In the area of optimisation of manufacturing, progress was made by constructing the new factory in Exeter In the United Kingdom, which will replace two smaller production sites in 2017. As part of our announced reorganisation plan in the United Kingdom, several supporting departments will be brought together in 2017 in a new central office.
Thanks to the enormous efforts of our people, we can realise our mission and keep our promises to customers and other stakeholders. In 2016 we were successful in attracting strong new candidates for key positions as well as promoting and holding on to employees, because our mission and approach resonates with them. Adrie van der Ven has become member of our Executive Committee as of the beginning of 2016. He is the new COO for Germany and Belgium and additionally has new regions in portfolio. His experience is essential for the further international expansion of ForFarmers outside of its existing core countries. At the end of 2016, Nico de Vos, Director Operations & Supply Chain and one of our Executive Committee members, retired. Nico worked for ForFarmers for 28 years and contributed to the implementation of the One ForFarmers approach with his wealth of experience. I would like to wholeheartedly thank him for that, on my behalf and that of all of my colleagues. His tasks will be integrated in the portfolio of Steven Read. The number of members in the Executive Committee has accordingly decreased by one.
Sustainability forms an integral part of our business. We are always busy in making further progress on the three pillars of our sustainability strategy: Environment, People & Society, and Animal Health & Animal Wellbeing. Furthermore, this year we are reporting according to the requirements of GRI G4 (Core) for the first time. We devoted a lot of attention to health and safety procedures in 2016. The importance hereof is emphasized by the tragic fatal incident, in which we sadly lost a member of staff. Although our people are giving more attention to safety at work, we need to stay sharp on this subject, and there are still steps to make to bring about behavioural change.
We have again had a lot of support over the past year from our Supervisory Board. Not only in the area of business operations and strategy, but also for the listing on the stock exchange and all the associated changes.
It has been an exciting year on which I look back with pride. Our progress in 2016 strengthens my belief in that we have a fitting strategy and the team to execute this strategy successfully.
I would like to give special thanks, on my behalf and that of the other Executive Committee members, to all staff for their effort and dedication. Without them, 2016 would not have been as successful as it was. I would also like to thank our customers and other stakeholders for placing their trust in us.
Lochem, 13 March 2017