back Nutreco

Annual review 2015

Nutreco highlights

Interview with Knut Nesse, CEO Nutreco

The numbers

Nutreco in perspective

Our position in the marketplace

From public to private

People

In order to support the communication and embedding of our company values, we initiated a local programme of ‘Culture Champions’...

Market trends

Growth

Egypt is the world’s second largest producer of tilapia fish. The growth of its aquaculture sector has been significant in recent years...

Acquisitions

In 2015, Nutreco announced the third-largest acquisition in its history – Indianapolis, US- based Micronutrients...

Partnerships

Research & innovation

Nutreco’s innovation and R&D activities are driven by the belief that we must bring knowledge and technology to the market faster...

AgriVision

Get in contact

Contact us

Nutreco N.V.

Prins Frederiklaan 4
3818 KC Amersfoort
P.O. Box 299
3800 AG Amersfoort
The Netherlands

Phone: +31 (0)33 422 6100
Fax: +31 (0)33 422 6105
E-mail: corpcomm@nutreco.com
Trade Register no 16074305 Eindhoven (NL)


Nutreco Nederland B.V.

Veerstraat 38
5831 JN Boxmeer
The Netherlands

Phone: +31 (0)485 589 955
Fax: +31 (0)485 574 518
Trade Register no 16058721 Eindhoven (NL)

Nutreco highlights

The numbers

Overall, Nutreco performed very well in 2015, with a growth of revenue to €5.7 billion and an operating result of €282 million. These increases were mainly the result of a more favourable product mix. In addition, Nutreco's acquisitions in Brazil and positive currency effects made favourable contributions to the overall results. Results improved in all of Nutreco’s segments: Animal Nutrition, Aquafeed and Nutreco Iberia.

Animal Nutrition, primarily trading under the Trouw Nutrition company brand, performed well despite difficult market circumstances in the global swine and dairy sectors. The increased focus on global products improved the performance of the Selko feed additives brand.

In Aquafeed, trading under the Skretting company brand, the salmon feed business performed strongly in 2015, and maintained the position as global market leader, although there is still overcapacity in the main Norwegian market. In shrimp feed, Ecuador reported strong organic growth.

Nutreco’s Iberian business performed well on the back of a recovering Spanish economy. Nanta, a producer of compound feed, reported growing volumes to third-parties, while Sada, which specialises in poultry meat, benefited from strong margins during the high (summer) season.

Nutreco highlights

Nutreco in perspective

Nutreco produces a broad range of innovative and sustainable nutritional products serving the needs of poultry, pigs, ruminants, companion animals and other livestock animals as well as for more than 60 species of fish and shrimp. Where are we in the market place compared to our competitors?

Four companies supply half of the global premix market: DSM, Nutreco’s Trouw Nutrition, Cargill’s Provimi and InVivo/Evialis. The rest of the market is supplied by a large number of local producers. Trouw Nutrition holds the No. 2 position in the global premix industry, with a market share of around 12%. The markets for preventive animal health products and feed additives are fragmented.

The top three salmonid feed producers in the free market – Skretting, Cargill/EWOS, and BioMar – together account for close to 90% of the total global unintegrated salmonid feed market. Skretting is the world’s largest salmonid feed producer.

Most of the world’s shrimp feed is produced in China, Thailand, Ecuador, India, Indonesia and Vietnam. Skretting is the world’s third-largest shrimp feed producer. The other major producers are Charoen Pokphand Foods (CPF), Ewos/Cargill, Guangdong Evergreen Group, Guangdong Haid Group and Guangdong Yuehai Feed Group

Nutreco highlights

From public to private

With effect from 16 April 2015, Nutreco was delisted from the Euronext Amsterdam stock exchange following the takeover by SHV. Nutreco had been listed on the stock market for over 18 years under the ticker symbol NUO, with the initial public offering taking place on 3 June 1997.

Over two decades, Nutreco transformed itself into a global animal nutrition and fish and shrimp feed company. Divested Nutreco operations such as its compound feed activities in the Benelux, its global salmon farming operations, animal breeding activities and meat processing in the Netherlands have become part of market leaders. The company also acquired significant animal nutrition and fish feed businesses in countries such as Brazil, Canada, China, Ecuador, Mexico and Vietnam. Today, Nutreco is fully focused on animal nutrition and fish and shrimp feed with a global presence in more than 30 countries.

The total shareholders return over the 18 years that Nutreco was listed was 885%, thereby outperforming most of the AEX and AMX constituent companies. In that period, Nutreco won the Sijthoff Prize three times for excellence in financial reporting by Dutch-listed companies for its annual report, which also reflects on the openness with which the company has sought to engage with the capital markets.

With the takeover by SHV, a new chapter opened for Nutreco as a private company. However, the existing 'Driving sustainable growth' strategy continues with the full support of SHV.

Nutreco highlights

People

In order to support the communication and embedding of our company values throughout our 11,000 staff in more than 35 countries, we initiated a local programme of ‘Culture Champions’. More than 70 local champions have been actively engaged across most of our Operating Companies. These employees are tasked with a part-time responsibility for carrying out actions that support and encourage local culture development.

In 2015, more than 200 individual actions were carried out. These included team building events, local caring actions for the community, personal development programmes for local staff, events to nurture innovation within our local organisations, furthering connection between office and factory employees, more focus on encouraging collaboration between departments and enhanced communication to our customers and suppliers on our values. The programme will continue in 2016 with a new group of Culture Champions and almost all Operating Companies in scope representing Nutreco’s commitment to strengthening culture development.

As a result of the integration with SHV more emphasis is put on talent management in order to build a talent pipeline for future leadership. This was supported through a fixed quarterly process governed by SHV.

Nutreco highlights

Market trends

In 2015, the global agricultural market for the most part again experienced reduced raw material prices and was also more balanced and less price-volatile than in recent years. Demand for premix and feed specialties had been under pressure over the last few years due to significantly higher raw materials prices, which eased over 2014/2015 with a significant supply growth of wheat, maize and soybeans. Nutreco’s Animal Nutrition business performance is driven in part by trends in herd sizes and meat production. Globally, meat production grew slightly overall, with a drop in beef production being offset by an increase in mainly poultry. Overall meat prices fell more than 20% due to slower economic growth and excess expansion supply in poultry and pork following historic price highs in 2014.

The addressable global aquaculture feed market for Nutreco, including salmonids, shrimp and high-value whitefish, is estimated at approximately 22 million tonnes and over the long-term is expected to grow by an average of 5% per year.

Animal Nutrition

Pig meat production grew slightly, but China decreased considerably due to lower consumption and margin pressure as a result millions of smaller farmers leaving the industry. This was compensated for by increased supply in the EU, US and Canada.

Poultry production had a second year of limited growth of around 1% as excessive supply expansion has outstripped continued strong fundamentals – robust demand, ongoing low feed prices and relatively high protein prices. This has pressured producer profitability in most regions of the world. Markets in China and Thailand are likely to be impacted by avian influenza (AI)-related import restrictions on breeding stock by the US in the second-half of 2016, potentially affecting global poultry markets.

Beef production decreased by more than 1% as decline continued in developed countries. Dairy production again increased by approximately 2%. Although in the second-half of the year, the rate of milk production growth from the major exporting countries eased, excluding the EU, as farmers responded to lower global dairy prices. EU growth was positive following the removal of quotas in April.

The compound feed market overall probably grew again slightly to close to 1 billion tonnes and a value of US$ 400 billion with overall higher animal production being offset by increasing efficiency and feed conversion ratios. The global feed specialties market continues to grow as increasing professionalisation drives farmers to greater efficiency and search for return on their animals.

Aquafeed

The principal markets for salmonid feed are Norway and Chile, where more than 75% of the world’s farmed salmonids are harvested. The average long-term annual growth in salmonid feed volumes from 1998 to 2015 was more than 5%, but in recent years fish health issues, particularly in Chile, have impacted the supply. Consequently the global market for salmonid feed in 2015 saw a reduced growth. In Norway, there have been significant sea lice issues with high treatment costs. The Chilean salmon industry faced a reduction in salmon prices of approximately 15% in the final months of 2015 and also experienced significant biological challenges. Both factors have strongly impacted the profitability of many of our Chilean customers.

Most of the world’s shrimp feed is produced in China, Thailand, Ecuador, India, Indonesia and Vietnam. The global market has a long-term growth rate of approximately 5% per year but is subject to regional supply volatility due to shrimp disease risks. In Asia, feed production in Vietnam and Thailand grew as the industries began to recover from the early mortality syndrome (EMS) disease problem of recent years, driven by improved farming practices with more interest in higher quality feed. It has been a challenging period for Thai, Chinese and Vietnamese shrimp feed producers due to the presence of EMS in those countries, although recovery is now underway. Despite recoverythis revival, production in 2015 was still 10% lower than 2013 levels. The tightened supply did help shrimp prices in 2014, but prices have now fallen with the China economic slowdown significantly impacting demand. Although it is expected that those countries will recover to pre-EMS production levels in the coming years, countries such as Ecuador that did not suffer from EMS might still have an advantage in the world markets for some time.

Nutreco Iberia

The third-party market for compound feed is shrinking, which is mostly the result of a shift towards integrated farming operations. This has been driven by low profitability for farmers over the last few years, cash-flow challenges, and investment capital requirements in order to meet new animal welfare regulations. Overall herd sizes have declined slightly for most species apart from beef cattle and broilers. The general demand and supply situation for poultry products in Spain was more stable in 2015 compared to 2014, relatively worse prices for poultry meat compared with 2014, but mitigated with lower production cost.

The market for pork meat is growing, driven by increased export demand. Pork prices in Spain declined as the year progressed, driven by lower feed costs. Iberian pig prices remained at very high levels throughout the year.

Nutreco highlights

Growth

Expansion tilapia feed plant in Egypt

Egypt is the world’s second largest producer of tilapia fish. The growth of its aquaculture sector has been significant in recent years and production is expected to grow further from 1.3 million tonnes in 2014 to 2 million tonnes in 2020. Nutreco continued its commitment to growth in Egypt by investing in an extra production line in its existing Egyptian plant, in the eastern part of the Nile Delta. The investment enables Skretting, Nutreco's aquafeed business, to triple its tilapia fish feed capacity in Egypt to 150,000 tonnes and extend its market leadership.

New premix plant in Indonesia

Nutreco opened a new animal nutrition plant in East Java, Indonesia. The €15 million investment in greater production capacity of premixes, farm minerals and young animal feed enables Nutreco’s animal nutrition business Trouw Nutrition to further strengthen its position in the region. The new premix plant in East Java is Nutreco’s second premix plant in Indonesia and its fifth in Asia. It has a 12,000-tonne premix and farm minerals capacity and will employ 20 people.

Upgrade animal nutrition plant in China

Nutreco has upgraded its animal nutrition plant in Hunan, China. The Trouw Nutrition plant was originally constructed in 1999 and was designed primarily to produce compound feed. It has been upgraded to a premix, farm minerals and young animal feed plant in order to meet the growing demand for high quality, sustainable animal nutrition products in central and southern China. It has a capacity of 75,000 tonnes and will employ 200 people.

New premix facility in Vietnam

Nutreco has opened a new premix-facility in the Ho Chi Minh City area of Vietnam. The small premix operation produces both premixes and farm minerals. The facility was opened to enter the Vietnamese market with a full-service model. Trouw Nutrition can now serve customers with the complete portfolio nutritional solutions and services, while reducing lead-times and allowing for direct invoicing and deliveries to end-customers.

Nutreco highlights

Acquisitions

Micronutrients

In 2015, Nutreco announced the third-largest acquisition in its history – Indianapolis, US- based Micronutrients. The deal enabled Trouw Nutrition to further strengthen its Selko Feed Additives portfolio. Micronutrients is the global leader for hydroxy trace minerals, which are marketed under the global brand name IntelliBond®. Hydroxy trace minerals are specialty trace minerals that due to their unique chemical structure improve stability of premix and feed and bioavailability (better digestion) in the animal compared to inorganic trace minerals. Higher bioavailability under specific conditions leads to increased animal performance as well as environmental benefits. The company is especially strong through its own commercial organisation in the US, while also selling in many other countries around the world through distributors.

In combination with Trouw Nutrition’s existing product range and R&D capabilities, the acquisition of Micronutrients makes Trouw Nutrition a leader in a specific feed additive segment. Furthermore, Micronutrients’ products will support its global premix value proposition. For more information, visit Micronutrients.

Nutreco highlights

Partnerships

ForFarmers

In the fourth-quarter of 2014, we renewed an important strategic partnership with European compound feed customer ForFarmers. The partnership covers the purchase of premixes, additives and specialties and is an example of an alliance that will result in better returns for our customers. An important element of this strategic partnership is the collaboration in the areas of research, innovation and the marketing of high-quality nutritional solutions, for example within the young animal feed sector.

In 2015, we realised the first concrete result of the partnership with the launch of a jointly developed piglet feed, which is branded as ‘VIDA, powered by Milkiwean’. VIDA is a newly developed feed aimed at piglets from day-one through to the grower phase. It is a direct result of combining our R&D strength with ForFarmers’ on-farm specialist expertise. This has created a knowledge pool that is unique and unprecedented in the animal feed industry. The result is a new piglet feed based on Milkiwean. VIDA has been launched in the Netherlands, Germany, the UK and Belgium.

Nutreco highlights

Research collaboration

Nutreco’s innovation and R&D activities are driven by the belief that we must bring knowledge and technology to the market faster, both in developing as well as industrialised countries. We will do this by translating world-class research into practical, on-farm solutions, while integrating and adapting the latest technologies. In 2015, Nutreco announced that it would double its annual investment in R&D and innovation to €50 million over the coming years and that it would combine its animal nutrition research and development efforts under Trouw Nutrition R&D. Fish feed research and development is led by Skretting Aquaculture Research Centre (ARC).

Nutreco has 11 research centres. In animal nutrition, Trouw Nutrition Research Centres are based in the Netherlands, Spain and Canada. In aquafeed, Skretting ARC is based in Norway, with other units in Italy, Spain, Egypt, Chile, Japan and China. In order to support R&D activity development, our shrimp feed trial plant research centre in Hezhoubei, China, was expanded with a new room for shrimp trials. This brings the total capacity to 152 tanks for shrimp growth trials and 42 tanks for digestibility trials.

We nurture a company-wide, ideas-based approach through the use of knowledge platforms that connect all our stakeholders in the value chain. Collaboration is key to success and close-working partnerships are a pre-requisite for speeding up the overall innovation development cycle. Nutreco has over 60 partnerships with universities and research institutes worldwide. In 2015, Skretting ARC entered into a five-year research partnership with WorldFish, an international research organisation that harnesses fisheries and aquaculture to reduce hunger and poverty, to support the sustainable development of aquaculture in the region.

Nutreco highlights

AgriVision

In June, we organised our biennial AgriVision conference in Noordwijk aan Zee, the Netherlands. AgriVision provides a platform for informed discussion at a strategic level on current and future concerns in the protein food chains. AgriVision aspires to shift minds, develop new ideas and inspire approaches for the benefit of all those involved in the feed-to-food chain.

Keynote speaker Dr Madeleine Albright spoke of her belief that food security is as much a moral and political issue, as it is defined by markets and international agreements. Making true progress in the fight against food insecurity requires a multi-sector approach with key stakeholders working in concert, said Dr Albright. As such, leaders in global food and agriculture should to do more to engage on food security issues at a “substantive level”. They must place a high value on the nutritional quality of food, a sustainable food supply, sensible water use, and work to ensure climate security in all aspects of their businesses, she said. They also need to engage in “continuous and candid dialogue” with leaders in the public and NGO sectors.

Together with sister biennial conference AquaVision, AgriVision 2015 was the 18th conference by Nutreco in the series. Nutreco has been organising these international conferences every year since 1996, bringing multiple stakeholders together to discuss challenges and opportunities in agriculture and aquaculture.

CEO of Nutreco

Short interview with Nutreco’s CEO Knut Nesse