FirstFarms A/S Reports on Half-Year Financial Performance for 2024
Impact of Low Crop Prices and Limited Rainfall on Expectations
In the first half of 2024, FirstFarms A/S has successfully maintained its EBITDA levels while achieving an 8% increase in turnover, primarily driven by strong animal production. However, the challenges in crop and pig production have led to a downward adjustment in overall earnings expectations by 20 million DKK for the year. Despite this, the adjustment does not alter the company’s long-term growth goals. FirstFarms continues to demonstrate a solid financial foundation and maintains a strong liquidity position.
Key Financial Figures for H1 2024
During this reporting period, FirstFarms reported the following key financial results:
- Turnover of 220 million DKK (up from 203 million DKK in 2023)
- EBITDA of 65 million DKK (compared to 67 million DKK in 2023)
- EBIT of 35 million DKK (down from 42 million DKK in 2023)
- Pre-tax profit of 18 million DKK (compared to 39 million DKK in 2023)
The 8% increase in turnover is largely due to higher sales of piglets from new production facilities established in Hungary.
Operational Insights: Efficiency and Challenges
FirstFarms' strategic business model focuses on enhancing production efficiency, promoting circularity, owning land, and diversifying risks across various operational segments and geographic locations. This approach has enabled the company to maintain a satisfactory EBITDA performance. However, earnings before tax have declined compared to last year, primarily due to rising interest rates and inflation, which have increased operational costs. On a positive note, the establishment of irrigation on 1,300 hectares in Romania is expected to ensure stable crop yields in the future, with plans to expand irrigation coverage further.
Market Trends in Animal Production
FirstFarms has reported that efficiency and productivity remain high, resulting in a 4% increase in milk production compared to the same period last year. Although milk prices have been rising in 2024, they have not yet reached the levels seen in H1 2023. The prices for piglets and slaughter pigs have remained favorable during the first half, despite a decline in pig prices since July. Nonetheless, these prices continue to hold at acceptable market levels.
Furthermore, revenue from piglets and slaughter pigs has increased by 25 million DKK compared to H1 2023, thanks to the launch of two new pig production facilities in Hungary.
Crops Facing Price Challenges in Europe
Crop production is currently facing pressure from lower prices compared to those achieved in 2023, which has negatively affected overall earnings. However, there is an expectation for a gradual increase in crop prices in the future. FirstFarms markets 65% of its crop production while using the remaining 35% for animal feed. Although the harvest season is ongoing, it has been marked by significant geographical variations in yield and quality, largely due to limited rainfall.
Land Portfolio Expansion
During this review period, FirstFarms expanded its land portfolio by acquiring an additional 325 hectares in Romania and Slovakia. The company now oversees a substantial total of 17,000 hectares of land, which is considered an inflation-resistant asset, making up a quarter of its overall balance sheet.
Commitment to Sustainability
FirstFarms remains dedicated to enhancing sustainability, focusing on reducing emissions and ensuring compliance with CSRD and EU taxonomy regulations. The company is also committed to implementing effective digital solutions to facilitate this transition.
Adjusted Expectations for 2024
Given the current circumstances, FirstFarms has revised its 2024 projections downward by 20 million DKK, now anticipating an EBITDA in the range of 90 - 120 million DKK and an EBIT of 30 - 60 million DKK. For context, the company reported an EBITDA of 101 million DKK and an EBIT of 50 million DKK in 2023. While there is hope for rising crop prices in the latter half of 2024, current indicators suggest that pig and milk prices will stabilize at recent levels, despite declines in both categories during Q3. The ongoing harvest has been adversely affected by limited rainfall and heat waves.
FirstFarms’ enduring strategy, which emphasizes circularity and risk management, continues to provide a solid framework to help the company achieve its long-term objectives, even in challenging conditions.
The overarching goal for FirstFarms is to increase the Group's annual turnover to 750 million DKK and to achieve an EBITDA of at least 240 million DKK by 2028.
Frequently Asked Questions
What is the main focus of FirstFarms A/S's financial report for H1 2024?
The report emphasizes the company's financial performance, showcasing an 8% increase in turnover while highlighting challenges related to crop prices and limited rainfall that have affected expectations.
How proficient is FirstFarms in managing its agricultural land?
FirstFarms effectively manages a total of 17,000 hectares of agricultural land, which has recently expanded, positioning it as a resilient asset against inflation.
What are the expectations for FirstFarms in the upcoming months of 2024?
The company anticipates a gradual rise in crop prices, while pig and milk prices are expected to stabilize at their current levels.
What strategies does FirstFarms implement to ensure sustainable operations?
FirstFarms is committed to reducing emissions and aligning its operations with new regulations, while also integrating effective digital tools into its sustainability efforts.
What are FirstFarms A/S's long-term financial goals?
The company aims to increase its annual turnover to 750 million DKK and achieve an EBITDA of at least 240 million DKK by 2028.
