In its report on the company's performance in the second half of 2009, Nutreco states it had a strong second half year 2009. Among the highlights of the report are an EBITA for the period of €133.6 million, 33.9 per cent higher than the previous year. All businesses reported above or in line with second half 2008. The operating result for 2009 of €175.2 million was 3.8 per cent lower than 2008. Revenue for 2009 of €4,511.7 million with the impact of lower volumes limited to 3.7 per cent.
Cash-flow was strengthened by a reduction of net working capital of €98 million. The dividend proposal is €1.32 per share, and a pay-out ratio of 45 per cent.
CEO's comments
Wout Dekker, Nutreco CEO, commented: "We are pleased with the performance in 2009 despite the economic turmoil. Nutreco applied strong measures at the beginning of 2009 to withstand the recession. Our programmes to reduce working capital and operational costs paid off. After a challenging start, we ended the year in a much stronger mode and well positioned for 2010. The development of the overall demand for our products is encouraging. We achieved a strong increase of EBITA in the second half of 2009 compared with the same period in 2008."
Sound operational performance in challenging year
He continued: "In 2009, there was a lower demand for feed in some regions, mainly for dairy cows and pigs related to the low milk and pig prices. Farmers quickly adjust to such situations by cost-saving measures which led to a temporary reduction in animal feed purchases.
"Our premix and feed specialties business performed well. The fundamentals in the fish feed business are solid, showing strong growth in Norway. The growth in Norway largely compensated the decline in Chile. The demand for fish feed in Chile is reduced due to lower fish numbers as a consequence of the ISA disease in salmon farming. On a positive note measures being implemented by the leading fish farming companies and the Chilean authorities give us good reason to believe recovery is near. The compound feed business in the Netherlands suffered a major loss at the beginning of the year and measures were taken that restored profitability. In Spain, our poultry business returned to profitability due to good poultry prices and lower feed costs."
Acquisitions strengthen market positions
Mr Dekker explained: "In 2009 we have strengthened our compound feed business in Spain and Portugal with the acquisition of the animal nutrition business from Cargill. This acquisition brings together the number one and three in the Spanish market for animal nutrition. Combining these businesses will create cost savings due to optimisation of production and logistics and it will bring potential for plant specialisation.
"In November, we announced the acquisition of a 51 per cent shareholding in Fri-Ribe, a Brazilian animal nutrition and fish feed company, bringing Nutreco a platform to facilitate its further expansion in Brazil. The acquisition perfectly fits in our growth strategy to strengthen our global market positions in feed specialties and fish feed and brings substantial scope for selling Nutreco's feed specialties."
Doubling food production, while halving emissions
He concluded: "Population numbers are increasing towards nine billion by 2050. On top of that, incomes of people are rising as economies develop. With higher income, people consume more protein as meat, fish, milk and eggs. The challenge is clear. We must produce more food sustainably – more from less. Efficiency is key; delivering more from limited resources and simultaneously reducing emissions. The potential to sustainably increase efficiency is there. Nutreco is determined and passionate to make a positive contribution. Operating at the critical junction between raw materials and animal protein production, we apply our long tradition of animal nutrition knowledge to upgrade raw materials into feeds. For the first time, we will incorporate sustainability targets in the remuneration package of our managers, including clear targets to reduce the carbon dioxide emissions of our operations by half in 2015. Sustainability is becoming a more important part of our business model.
"The many initiatives we are involved in, mean that Nutreco is heading into the future with confidence and inspiration. Our slogan 'Feeding the Future' shows our ambition to have a leading role in developing advanced feed solutions and to grow our business as we do so. I am confident we are well on track to fulfil that ambition."
Strategic agenda 2010 and outlook
Nutreco reports it will continue to focus on growth in animal nutrition and fish feed. In 2010, Nutreco will focus on new geographic regions and markets with perspective of structural profitable growth in countries like Brazil, China, Russia and Vietnam. It also intends to participate in the industry consolidation process in markets where Nutreco has leading positions (Canada/North America, The Netherlands and Spain), as well as further strengthen its global market positions in feed specialties and fish feed by organic growth and acquisitions. Nutreco will also execute its science and innovation strategy and develop new sustainable products and feed solutions to add value to its customers' businesses and grow Nutreco's products portfolio to higher margin products
Although the economic environment continues to be uncertain, Nutreco believes that its business model and spread of activities provide stability in these challenging times. Barring unforeseen circumstances, Nutreco expects EBITA before exceptional items in the first half year of 2010 to exceed €50 million (2009: €41.6 million). Nutreco will also increase the investments in capacity expansion and plant optimisation related to volume growth and the acquisition of the compound feed plants that were acquired from Cargill in Spain and Portugal. The capital expenditure in 2010 is therefore expected to be higher than depreciation level.
