Danish Agro delivers historically good results
In 2022, the Danish Agro group delivered its best results ever.
The group’s profit before tax (EBT) landed at EUR 162 million and is a full 86% higher than the previous year.
“In many ways, 2022 was an uncommon year for us and also in the world around us. War broke out on the European continent and it was a contributing factor to what were already high and volatile prices on, among other things, crops, raw materials, fertiliser and energy increasing further. This has demanded great focus on risk management and security of supply to customers. I am proud that we have made it through the year with such fantastic results,” says Henning Haahr group CEO of the Danish Agro group.
We were less than two months into the year when Russia began its invasion of Ukraine and the war had both direct and indirect consequences for the Danish Agro group in 2022.
In the wake of the war, the board of the Danish Agro group and its management made a resolute decision to stop trading with Russia with the consequences it entailed.
However, the developments in Russia are in strong contrast with the group’s other international activities. Thus, the major increase in earnings is largely the result of the group’s international strategy, as the total agribusiness outside of Danish borders had an increase in profits before tax of EUR 71 million.
“A number of years ago, the board of directors at Danish Agro took a visionary decision to go after an international presence with a focus on the countries surrounding the Baltic Sea and this has seriously paid off now to the benefit of our shareholders with a surplus distribution of EUR 35 million. Not least, it is good that our German subsidiary Ceravis is now profit-making,” states Henning Haahr.
In 2022, the group’s turnover ended up at EUR 7.9 billion, which is 34% higher than in 2021. Even greater is the progress, when measured using the operating profit (EBITDA), which was realised at EUR 265 million. This is an increase of 54% and is also the highest yet for the group.
The total balance sheet for 2022 has increased to EUR 3.1 billion, compared to EUR 2.7 billion in 2021. This is primarily due to the generally higher prices of crops, fertilisers, and raw materials, as well higher activity. Current assets are thus higher than both the budget and last year’s figures. Inventory has been generally higher than normal to increase the security of the supply to our customers.
The group equity increased by EUR 134 million and amounted to EUR 908 million at the end of the year. Coupled with the increased balance sheet, this results in a solvency ratio of 29.6% versus in 29.1% in 2021.
In the Agribusiness business area a growth of 40% was achieved in 2022, a year which was characterised by tremendous volatility and supply challenges. The business area noted an annual turnover of EUR 6,590 million and an operating profit of EUR 191 million – an increase of 77%.
This was, among other things, realised on the background of new record earnings in Germany, the Baltics, Poland and Hungary. The growth is primarily due to higher prices, while there has also been organic growth in volumes.
“We have a solid foundation with agribusiness on markets around the Baltic Sea and our focus in the coming years will be to develop further on these markets. There are several markets where there continues to be uncultivated potential,” says Henning Haahr.
In 2022, the Group's machinery activities achieved a record turnover of EUR 809 million, which represents an overall growth of 7% in relation to 2021. At the same time the operating profit ended up at EUR 36 million, which is an increase in earnings of 28% in relation to 2021.
“2022 was a particularly challenging year in our machinery division due to delayed deliveries, so seen in this light it is a very satisfactory result. We have focused on and ensured that all farmers were able to handle the harvest despite missing deliveries. We continue to see a number of opportunities for improvements across the line in the entire business area,” explains Henning Haahr.
The group's Special Feed business area realised an operating profit of EUR 34 million for 2022, which from an earnings perspective is on a par with last year. At the same time, the top line rose by 10% to a record turnover of EUR 490 million.
At the same time the year was characterised by Vilomix having to close its subsidiary in Russia and stop all trade with the country, as a consequence of the invasion of Ukraine. The closure of Vilomix’ Russian subsidiary where there were five employees, entailed a direct loss of EUR 1 million in addition to lost trade.
On the other hand, there has been focus on integration and development of Spanish Tegasa, which was acquired in 2021.
“It is still the ambition that our Special Feed division will play an even greater role globally, but due to the geopolitical risk Vilomix’ previously announced growth ambitions in Asia are put on hold. Instead, we are investigating the opportunities in other places in the world,” states Henning Haahr.
The Danish Agro group’s business area Food had yet another turbulent year with the aftereffects of COVID-19 and the outbreak of avian influenza in several market areas. Despite this, in 2022 a turnover of EUR 398 million was realised, which is a growth of 19%, and an operating income of EUR 19 million, due to EUR 11 million in 2021.
“The results in the Food division continue to be challenged by external factors, but with a strong organisation we have succeeded in creating significantly improved results,” says Henning Haahr.
In 2022, DAVA Foods expanded its product range with plant-based foods which are gathered in the company DAVA Foods Ingredients.
In DanHatch the company DanPiglet was dismantled after several years with a deficit, but on the other hand activities involving poultry were successful. Here, in 2022, there were solid earnings and a sales record with sales of 490 million day old chickens and with an expectation to pass 500 million in 2023.
Main goal for 2023
Due to the 2022 results, the Danish Agro group is financially strong at the start of 2023.
Our focus in the coming year will also be on creating value for the farmers we cooperate with, at the same time as we are mindful of addressing a number of commercial challenges.
“High interest rates, high inflation, rising energy costs and a Danish pork production under pressure are some of the factors that challenge us and give us low visibility. Therefore, we have significant focus on costs and risk management in 2023,” says Henning Haahr.
This specific focus was one of the reasons why the subsidiary Hedegaard was merged into the owner group Danish Agro in January 2023. At the same time, it makes the process going forward smoother as our new business and IT system AGRO365 will be put into use during the first half of 2023.
In 2023, there will also be focus on working further on the three overall ESG goals, which were adopted in 2022.
Before 2026 we will have reduced CO2 emissions in Scope 1 and 2 by at least 30% in relation to 2020 and before 2030 the reduction will be at least 50%.
It is also a part of the group’s new ESG goals to maintain our high degree of employee satisfaction. For the first time, we conducted a global employee engagement and satisfaction survey in 2022, and the goal is to maintain or improve this score towards 2030.
Finally, it is the group’s goal to actively promote the under-represented gender in our governing bodies and management teams. Internally in the group we have 19% women on C-level (CEO, CFO and COO). Our goal is to increase the number to 30% no later than 2030.
It is an ongoing objective of the group to improve our financial key figures so that our starting point for the further development of the business is the strongest possible for the benefit of our owners.
“In 2023, the same tailwind cannot be expected on the market as in 2022 and the many impending uncertainties make their mark on the Danish Agro group’s financial objectives for 2023. Therefore, we are budgeting with a group profit before tax, EBT, of EUR 70 million, which is lower than what we realised in 2022,” says Henning Haahr.
The group aims to realise the following primary financial objectives in 2023: