Felleskjøpet Agri released Q1 2020 financial results


Revenue in Felleeskjøpet increased by NOK 101.8 million compared to the same period in 2019. Profit before tax ended at NOK -159.5 million, down from NOK -92.2 million in the first quarter of 2019. The first quarter is normally a weak quarter for the group, and this year has in addition been negatively affected by, among other things, weakening the Norwegian krone. Almost normal operation has so far been maintained also through the corona situation in March.
The Group’s operating revenues totaled NOK 3.6 billion in the first quarter of the year, an increase of NOK 101.8 million from the previous year. Profit before tax, which ended at -159.5 million against -92.2 in 2019, was negatively affected by a weakening Norwegian krone as well as a somewhat weak winter season, compared with last year. The first quarter is normally a weak quarter for the Group.

  • The joint purchase results in the first quarter are always characterized by low season in agriculture and retail. Building up stock of important farmer funds and purchasing for the garden season in the stores is capital intensive. Sales were slightly behind the start of the first quarter of this year, but in March, sales increased significantly and help us to show good progress from last year. This is a momentum that we are taking with us in the second quarter, which is the most important period of the Joint Purchase, says Terje Johansen, acting CEO of the Joint Purchase Agri.

The joint purchase has done well in the corona crisis
All parts of society are affected by the corona crisis and the measures taken to prevent the spread of infection in Norway. Since the corona measures were introduced in Norway, the joint venture has had full operation in almost all parts of the group, and has been able to supply both the farmer and the consumer. Agriculture is now experiencing great interest and renewed respect for the socially critical role of the industry.

  • Our main priority in the period we have now left behind has been to deliver what the farmer needs from feed and other means of intervention to succeed. Like everyone else, we have been affected by the quarantine measures and followed all the advice of the health authorities. At the same time, we have been able to deliver and maintain normal operations in most of the Group. This is crucial for the farmer’s operations and food production in Norway, says Johansen.

The joint venture purchases some products in foreign currency, and the depreciation of the krone has resulted in a significant currency loss during the quarter.

Lift in retail at the beginning of the second quarter
The Agriculture and Machine business areas maintain their market share during the period and do well. Both divisions are ahead in terms of profit compared to the same period last year. After a weak start to the year, retail activity also rose significantly in March. Both Granngården in Sweden and Felleskjøpet’s stores in Norway experienced sales growth towards the end of the quarter. Early spring and more time to arrange the house and garden as a result of the corona has provided good sales figures.

  • The fact that the large business areas Agriculture and Machine are doing well shows that we have a solid position in the market, while at the same time improving operations. Our retail business, which had a slightly weaker start to the year, received a good boost in March. If we compare revenue in March with the same month last year, we see a turnover growth of around 26 per cent. E-commerce is increasing more than traditional commerce. Both in Granngården and at Felleskjøpet, online sales have doubled in the period, says Johansen.

Cernova, which is the group’s mill and bakery operations, is also affected by the corona crisis. The mills are seeing positive effects with increased turnover of flour and bakery products in the grocery trade, while the Master baker is declining somewhat. Nelson Garden, a leader in seeds and onions for the Nordic garden market, is also experiencing good sales and will increase its profit in the first quarter.
At the end of March 2020, Felleeskjøpen’s equity ratio was 31.3 per cent, down from 31.9 per cent at the same time last year.

Key figures Felleeskjøpet Agri Group
(DKK million) Q1 2020 Q1 2019
Operating revenues 3 553 3 452
Operating profit -74.8 -61.9
Profit before tax -159.5 -92.2
Profit after tax -132.9 -70.7