2023 was both a challenging and a good year for the Danish Agro Group. The external factors that contributed to extraordinarily high profit in 2022 were reversed in 2023 and, as expected, contributed to a decline on the top and bottom line. ‘We predicted that 2023 would not bring the same market tailwinds as 2022, and that is exactly what happened. Prices of crops, raw materials and fertilisers fell significantly during the year. This, combined with sharply rising interest rates, lower yields and declining European pig production, resulted in a challenging year. In light of this, we are very pleased with the results for the year,’ says Henning Haahr, CEO of Danish Agro. The Group’s turnover was EUR 6.9 billion at the end of 2023, which is 13% lower than in 2022 but 16% higher than in 2021. Meanwhile, profit before tax (EBT) fell to EUR 73 million in 2023, which is above budget for the year. The decline is, among other things, due to the fact that interest expenses increased by more than EUR 27 million. Operating income (EBITDA) decreased to EUR 192 million in 2023, compared to EUR 265 million in 2022. Despite the decline, operating income is the second highest in the Group’s history and exceeds the 2021 result by EUR 20 million. ‘We look back on 2023 as a year where our group structure has really proved its worth. Our business areas complement each other well, and almost all parts of the business performed incredibly well in a difficult market. At the same time, we have laid the groundwork for growth in the coming years, with the implementation, among other things, of a new ERP system, acquisitions in South America and the exploration of a number of major investments in energy production,’ says Henning Haahr. He also highlights the integration of the agribusiness company Hedegaard, which was merged into the owner group Danish Agro at the beginning of 2023. This merger strengthens Danish Agro’s competitiveness in Denmark and allows for an even greater focus on the core business, digitalisation and sustainability. The Group’s total balance sheet decreased to EUR 2.8 billion in 2023, compared to EUR 3.1 billion in 2022. This is mainly due to the generally lower prices of crops, fertilisers and raw materials, as well as lower harvests. The Group equity totalled EUR 929 million at the end of the year. Combined with the shrinking balance sheet, this results in a record-high financial solidity of 32.8%, compared to 29.6% in 2022. ‘It is very satisfying that we have succeeded in moving the solvency ratio by more than 3 percentage points, and we are now approaching our long-term goal of achieving financial solidity of over 35%,’ Henning Haahr says. Agribusiness In 2023, the Agribusiness business area realised a turnover of EUR 5.5 billion, which corresponds to a decline of 16%. The business area recorded an operating income of EUR 104 million, compared to EUR 191 million in 2022. The decline is primarily driven by lower prices, while volume has also declined due to lower yields in most of the Group’s market areas. The harvest is at least 10 per cent below average throughout the market area, and the decrease in yield is even greater in Denmark. ‘The decline in this business area is quite natural given the circumstances. If we look at the underlying parameters, we are very satisfied. We continue to see strong growth opportunities in markets around the Baltic Sea and in the domestic market in Denmark,’ says Henning Haahr. He emphasises, that in 2023, the agribusiness in Denmark was affected by the implementation of a new ERP system and the integration of Hedegaard into Danish Agro. This creates a solid foundation for the future and provides opportunities for advancing in a competitive market. MachineryIn 2023, the Group’s machinery activities achieved a record-high turnover of EUR 824 million, representing an overall growth of 2% in relation to 2022. Meanwhile, the operating income ended at EUR 37 million, a rise in earnings of 3% in relation to 2022. ‘2023 was a challenging year for the Group’s machinery activities. This is because many machines ordered as far back as 2022 made it to delivery. At the same time, inflation and high interest rates contributed to some customer restraint and the financing of more expensive inventory. The year also saw a number of investments in digital solutions for agriculture, including new collaborations with innovative companies such as Exatrek and AgXeed,’ Henning Haahr points out. In 2023, the Danish Agro Group sold a total of more than 1,700 new and used tractors and more than 800 combine harvesters. It is very satisfying that the machinery companies in all nine markets gained an increased market share in both tractors and combine harvesters in a declining market. Special FeedIn 2023, the Group’s Special Feed business area realised a record-high operating income of EUR 36 million, an improvement of EUR 2 million year on year. This was despite a slight decline in turnover from EUR 490 million in 2022 to EUR 473 million in 2023, primarily due to falling raw material prices. Conversely, the total tonnage produced at Vilomix’s 11 factories grew by 4%. Like the rest of the Group, Vilomix has maintained the decision from 2022 to cease all trade with Russia, with all the consequences this entails. Before the invasion of Ukraine, Vilomix had significant sales to Russia, but in 2023 it managed to replace the lack of exports to Russia one-to-one through sales to other export markets, among other things doubling sales to Ukraine. In 2023, the division also focused on international development, acquiring Vitamix with production facilities in Brazil and Paraguay, while the remaining shares in Spanish Tegasa and Polish Blattin Polska were acquired. ‘We are pursuing our ambition to become a major global player in the Special Feed business area and reap synergies through joint sourcing, development and marketing of product concepts across markets. By growing globally, we can increase our knowledge of specialised feed advice through new digital, innovative solutions,’ says Henning Haahr. FoodThe Group’s Food business area also had a good year despite inflation, which resulted in changing consumption patterns and a reluctance to purchase products at a premium price. In 2023, the Food business area realised turnover of EUR 401 million, which is on par with 2022, and operating income of EUR 29 million, compared to EUR 19 million in 2022. ‘The profit in the Food division is the best ever. This is not least due to a very strong performance by the organisation, which managed to navigate a volatile market. Moreover, external factors were favourable, unlike in previous years,’ says Haahr. At the start of 2023, Danish Agro became the sole owner of DAVA Foods. This provides opportunities to better utilise synergies in the Group while making new investments in, for example, plant-based foods, a strategic focus for the Group. The company had a record year in 2023. Part of the growth in DAVA Foods is due to developments in the world markets, where there was an undersupply of eggs throughout the year, among other things because of outbreaks of avian flu in much of the world. The reduced supply of eggs led to rising egg prices, allowing us to increase quotations for eggs throughout 2023. Despite declining feed prices, the quotation remained historically high at the start of 2024. The Group’s partly owned subsidiary DanHatch also saw growth in its poultry activities. In 2023, earnings were solid and a sales record was set, with record sales of 503 million day-old chicks. DanHatch has developed very positively in recent years, and it is expected that the company will be able to expand its position in the coming years. Main objectives for 2024Thanks to the results and strategic initiatives in 2023, the Danish Agro Group enters 2024 in a financially strong position. In the coming year the Group will continue to focus on creating value for the farmers we collaborate with, while also addressing a number of commercial challenges. ‘We will continue to focus strongly on costs and risk management in 2024. Another key priority is to continue our work with the green transition to help enable the agricultural sector to produce more food with less input,’ says Henning Haahr. An ongoing objective of the Group is to improve our financial ratios in order to create the strongest possible foundation on which to further develop our business for the benefit of our shareholders. ‘We do not expect any major acquisitions in 2024, and our financial targets are generally similar to the figures achieved for 2023. We budget for turnover in the range of EUR 6.4-6.7 billion and a consolidated profit before tax (EBT) in line with the result for 2023,’ Henning Haahr says. The 2024 outlook for Danish Agro is that the Group’s financial strength will improve again in 2024. Equity is expected to rise to EUR 966 million, while financial solidity is expected to rise to 34%. The Group aims to achieve the following primary financial objectives in 2024: