Danish Agro realises best result to date and the highest turnover
In 2021, the Danish Agro group achieved its best result ever and its highest turnover.
CEO Henning Haahr describes this as very satisfying – not least in view of the fact that 2021 was a very challenging year commercially.
The Group's earnings before tax (EBT) of EUR 87 million is the highest ever and is 32% (EUR 21 million) higher than last year. The turnover for 2021 is EUR 5.9 billion, which is 12% higher than in 2020. The increase is generally due to both increased activity and market share across the Group's business areas and higher prices.
- 2021 has been a commercially challenging year, where Covid-19, highly volatile markets and supply issues made it demanding to do business. Precisely in this light, it is very satisfying that we have managed to ensure both supply and quality products for our customers while, at the same time, realising such strong results. I am very proud of the employees’ efforts in the past year, and we are now in a strong position for the coming year, says Henning Haahr, CEO of the Danish Agro group.
The operating income (EBITDA) is realised with EUR 172 million, which is also the highest ever for the Group.
- I am very pleased that both the operating and pre-tax profits have increased significantly compared to last year. These witness a healthy business, where achieving results follows increased activity, says Henning Haahr.
The total balance sheet for 2021 is EUR 2.7 billion, compared to EUR 2.3 billion in 2020. This is primarily due to the generally higher prices of crops, fertilisers, and raw materials, as well as logistics challenges related to the corona pandemic. Current assets are thus higher than both the budget and last year’s figures. Inventory has been generally higher than usual precisely to increase the security of the supply to our customers.
The group equity has increased by approximately EUR 57 million and at the end of the year amounted to EUR 774 million. Coupled with the increased balance sheet, this results in a reduced solvency ratio of 29.1% in 2021.
A strong asset for the farmer
According to the Chairman of the Board of Directors of Danish Agro, Jørgen H. Mikkelsen, the Danish Agro Group has in 2021 once again proved that it is a strong asset for the farmer in everyday life:
- Volatile markets and supply challenges have characterised 2021, but throughout the year, Danish Agro has succeeded in being able to supply farmers with quality products at competitive prices. It has been difficult, but we have also succeeded in achieving particularly good results. This demonstrates that we are in a strong position with an increasing number of farmers and are on a sound footing for the coming years. That is extremely positive,” says Jørgen H. Mikkelsen.
Good development in the Group's business areas
Danish Agro is organised in four core business areas – Agribusiness, Machinery, Special Feed and Food. In general, the business areas have been characterised by a strong development in 2021.
In the Agribusiness area, a great development has been achieved in activities and earnings despite the challenging price volatility in the market. Thus, in 2021, an operating income of EUR 108 million was realised. At the same time, we have achieved an overall positive development in sales volume, together with an increase in turnover of EUR 538 million. In general, the increase is due to higher prices, a valuable harvest, and the strategy of having long-term partnerships with both Danish and international suppliers. This has ensured the security of supply to customers for a year marked by logistical challenges.
Similarly, the positive development of the Group's international companies in the Baltics, Poland, Germany, and Finland in particular, where turnover has increased by 13%, contributing to the increase in turnover for the year. Furthermore, the activities acquired from Himmerlands Grovvarer contribute in 2021.
In 2021, the Group's machinery activities achieved a record turnover of EUR 759 million, which represents an overall growth of 18%. The growth is due to, among other things, a positive development in the division's three Baltic machinery companies and in Finland.
In general, there has been a need for investments in the market, and a valuable harvest this year has allowed this need to be met, which is reflected positively in the result for the year. At the same time, in 2021, the machine market saw general growth across the Group's machine companies; this has resulted in our increased market shares for all markets.
In the Group's Special Feed business area, an operating profit of EUR 34 million is realised this year, which is on a par with last year. The revenue realised in 2021 was EUR 446 million, an increase of 9% compared to 2020. This is due to price developments as well as organic growth in the business division.
In 2021, Vilomix focused on developing its international business which, among other things, resulted in the takeover by Vilomix in 2021 of the Spanish premix and mineral company TEGASA. The acquisition of TEGASA has also positively impacted the year’s profit.
The changed pattern of egg consumption due to the corona pandemic has affected the industry and caused an imbalance on the egg market due to a general lack of retail sales of eggs and egg products in 2021. At the same time, in 2021, several countries were affected by bird flu, which posed major challenges for the entire poultry industry. In addition the imbalance of the production of piglets has affected the results in DanPiglets A/S negatively.
These conditions affected the Danish Agro Group's Food business area, as reflected in the accounting result. Thus, in 2021, a turnover of EUR 334 million was realised, which is a decrease of 8%, and an operating income of EUR 11 million, which is a decrease of EUR 10 million compared with the previous year.
Main objectives for 2022
The Danish Agro Group is financially strong at the beginning of 2022. Our focus in the coming year will also be on remaining a competitive partner for the farmers with whom we cooperate while being mindful of addressing a number of commercial challenges.
It is an ongoing objective of the Group to improve our financial ratios so that our starting point for the further development of the business is the strongest possible. The continued development of the business thus takes place with several objectives in mind. We must respond to the wishes and needs of the modern farmer while ensuring the balance between financial resilience and future business potential.
- The commercial challenges in 2021 were greater than usual, and I expect the same will be true in 2022, with extraordinarily volatile markets as well as inflation in freight and energy costs, just as the security of supply is constantly being challenged. These factors are taken into account in Danish Agro Group's financial targets for 2022. Thus, we are budgeting a group profit before tax, EBT, of EUR 67 million, says Henning Haahr.
Across the Group, there will be several broad strategic focus areas in 2022.
- Our group strategy, “Stronger Together,” has five common themes, which will be the focus of the strategic efforts in 2022. These themes are Development and Collaboration, Digitisation, Plant-based Foods and Proteins, Employer Branding and Sustainability. We believe that efforts within these themes will help create even greater value on the farmer's farm, says Henning Haahr.
According to Group CEO Henning Haahr, the Danish Agro group aims to realise the following primary financial objectives in 2022: