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Record turnover and strong profits in an extraordinary year
Danish Agro delivered on a wide range of structural and financial goals in spite of a truly extraordinary year that confronted us both with Covid-19 and with a hacker attack.
In 2020, the Danish Agro group achieved its highest turnover so far of EUR 5.3 billion, a 12% increase compared with 2019. This is occurring in the context of generally increased activity and acquired Baltic machinery activities that gained approval from the competition authorities in 2020. The group’s operating profit (EBITDA) was at a very satisfactory level of EUR 152 million, which is EUR 11 million higher than last year. The operating profit is on a level with the highest ever for the group.
“2020 has been a challenging year, where both Covid-19 and a major IT attack made it incredibly hard to operate the business. Our employees have fought back bravely, and we have succeeded in providing services to our customers even when things looked at their most difficult. That’s precisely why I’m very satisfied with the excellent activity and operational earnings that we are achieving. This is a good basis for the year ahead,” says Henning Haahr, Group CEO of the Danish Agro group.
The earnings before tax (EBT) amounted to EUR 66 million, which is EUR 12 million higher than last year.
“We’re very satisfied to see that our profits before tax have increased markedly in relation to last year’s accounts. Despite heavy competitive pressure, we succeeded in creating more value through the results we achieved. That is very positive,” says Henning Haahr.
Due to a tight focus on managing capital tie-ups, the total balance sheet is at EUR 2.3 billion, which is on a level with last year. This was achieved despite a 12% increase in activity. At the same time, the net interest-bearing debt has been successfully maintained at its 2019 level, due to positive cash flows from operations and holding back with investments.
Group equity has increased by EUR 8 million and amounts to EUR 717 million at the end of the year after the repurchase of minority shares in connection with the purchase of shares in Hedegaard. This, together with the small balance sheet, means that the solvency ratio has increased to 31.0% compared with 30.9% in 2019.
Chair of the Board very satisfied
The chair of the Board of Directors at Danish Agro, Jørgen H. Mikkelsen, is very satisfied with the manner in which the Danish Agro group has navigated a challenging 2020:
“Danish Agro has been through a challenging 2020, where the company has been hit by a range of external, extraordinary challenges that have affected operations. Both Covid-19 and the IT attack have been handled with consummate professionalism and great skill, and it is therefore a very strong positive sign that despite these problems, the group’s accounts for this year were excellent, with record turnover. This demonstrates that we’re in a strong position with more and more farmers, and that we are starting the coming years on a sound foundation. That is very positive,” says Jørgen H. Mikkelsen.
In a stronger position
In 2020, a range of major structural goals were also met, which will have great significance for the further development of the group in the coming years.
In Denmark, in February 2020, Danish Agro concluded an agreement with Vestjyllands Andel on the purchase of the remaining 22.3% shares in Hedegaard. This has meant that Danish Agro as 100% shareholder can structure and implement synergies in a completely different way from before - work that is already well underway. In October, Danish Agro concluded an agreement on the purchase of Himmerlands Grovvarer, which will entail strengthening of Danish Agro’s activities in an area where we have not been especially well represented before. Himmerlands Grovvarer is a strong company that shares the group’s culture and values, and we look forward to having them as part of the Danish Agro family. After approval by the Competition Authorities, the takeover of Himmerlands Grovvarer will be implemented from 1 February 2021.
Internationally, Danish Agro has consolidated its market position in the eight countries where the group has agribusiness companies. The group’s three Baltic agribusiness companies achieved a record turnover of EUR 800 million, which is an increase of 25% compared with 2019 and an impressive increase of 62% compared with 2018. In Finland, Hankkija acquired activities in the agribusiness company SSO. This provides a strengthened agribusiness position in southern Finland. In Lithuania, Baltic Agro has been strengthened by the acquisition of a crop facility in Kedainiai, whose 18,000 tonnes reinforce still further our collaboration with farmers in central Lithuania. In Germany there has been massive competitive pressure, which has affected the commercial opportunities. Despite this, a record turnover of EUR 985 million has been achieved, which is an increase of 27% in comparison to 2019. Simultaneously, substantial progress has been made with the turnaround plan at Ceravis AG.
The total turnover in the group’s agribusiness division (Denmark, International and Support) is EUR 4,161 million following excellent growth of 10% in 2020. The division’s operating profit is EUR 93 million, which is on a level with 2019.
In 2020, the Danish Agro group also strengthened its position in the machinery market. 2020 was the year when we received approval from the European competition authorities for acquisition of the remaining 55% of shares in the three Baltic CLAAS machine companies AS Konekesko Eesti, SIA Konekesko Latvija and UAB Konekesko Lietuva - now Baltic Agro Machinery. With strong agribusiness companies and machinery activities in the Baltic countries, we have the aim of developing our position as the preferred partner of Baltic farmers. This approval has at the same time meant that in 2020, Danish Agro became CLAAS’s strongest partner in collaboration, with sales of machinery in seven countries and a total machinery turnover of EUR 642 million in nine countries.
Overall, the machinery division has grown by 23% to a turnover of EUR 642 million. Moreover, it is particularly positive that the machinery division has succeeded in attaining an overall operating profit of EUR 18 million, which is an increase of EUR 8 million in comparison to 2019.
The Vilomix group’s results have hit a record high in 2020. The Special Feed activities have achieved an overall turnover of EUR 408 million, which is a milestone for the division. The operating profit has reached an excellent level of EUR 34 million.
Overall, the Foods Division has had a very challenging year. The Foods Division has been confronted with no fewer than three pandemics in 2020: Covid-19, bird flu and African swine fever, which together have challenged the markets to their limits. Despite this, the Division has achieved operating income of EUR 21 million, which is EUR 6 million lower than the year before. This income is from eggs in DAVA Foods as well as the production of chickens and small pigs in DanHatch.
Main targets for 2021
The Danish Agro group is setting itself ambitious financial targets for 2021. The current business is the primary focus, and here, according to Henning Haahr, as many synergies as possible must be extracted from the current activities so that the overall market position is strengthened.
“There is no doubt that the coming year will also be characterised by strong competition, and we must respond to this and continue to adapt our business. On a purely structural basis, we will be focusing on our agribusiness and machinery activities,” he says.
“In addition, it is a long-term goal of the group to make our premix and vitamin activities into more of a global business. The focus for 2021 will therefore also be on analysing the potential for future growth on the international markets, including Asia,” says Henning Haahr and continues:
“For our food companies, the focus will be on integration and utilisation of synergies in the current business, including the integration of acquired activities and streamlining of operations,” he says.
Moreover, according to Henning Haahr, the focus in upcoming years will also be on sustainability.
“We actively support Danish Agriculture & Food Council’s vision of a climate-neutral food industry in 2050. We are currently in the process of developing a number of concrete action plans and targets to ensure that we contribute to achieving this vision. This will be through our own initiatives plus partnerships with farmers, organisations and companies, and we will need to find a financially viable route to climate-neutral production of foodstuffs. In our activities in the area of sustainability, we’re focusing on the areas where we have expertise and knowledge. At the moment, we’re developing a range of action plans that set new, specific goals and define efforts regarding environmental impact, energy efficiency and diversity, etc. These plans will support the UN Global Goals and will be finished in 2021,” he says.
According to Group CEO Henning Haahr, the Danish Agro group aims to realise the following primary financial goals in 2021:
In 2021, the Danish Agro group expects the volume of its activity to remain steady at 2020 levels, taking into account any alterations in market prices in the group’s main target areas for group turnover. The group does not expect to make any major acquisitions in 2021.