Goodvalley maintains strong operational performance
Goodvalley continued to strengthen the Group's platform for profitable growth in Q3 2018 based on high operational efficiency, completion of stable upgrades and the launch of branded products in Poland. Challenging weather conditions in Poland and Ukraine affected the harvest, and a lower arable yield combined with higher feed costs and a drop in pig and pork prices entailed lower earnings in the quarter.
Q3 2018
- Group revenue declined to DKK 377 million (Q3 2017: DKK 446 million) due to lower pig prices driven by a general oversupply of meat in the market and challenging weather conditions during the year. Goodvalley's Adjusted* EBITDA came to DKK 35 million (Q3 2017: DKK 115 million), corresponding to an Adjusted EBITDA margin of 9.2% (Q3 2017: 25.8%).
- Pig segment revenue declined to DKK 254 million (Q3 2017: DKK 296 million) following lower prices and volumes due to completion of stable renovations and improvements in the quarter as well as lower finisher capacity in Poland. Adjusted EBITDA was DKK 58 million (Q3 2017: DKK 106 million).
- Revenue from the Food segment was down to DKK 174 million (Q3 2017: DKK 201 million) driven by lower prices due to a general oversupply of pork in Europe, while EBITDA was down to DKK -14 million (Q3 2017: DKK -4 million) driven by marketing costs related to the launch of the Goodvalley brand.
- The Arable segment was severely impacted by challenging weather conditions, entailing lower revenue of DKK 96 million (Q3 2017: DKK 111 million) and EBITDA of DKK -18 million (Q3 2017: DKK 12 million) as the overall yield dropped by 30-40%.
- The Energy segment generated revenue of DKK 21 million (Q3 2017: DKK 16 million) and EBITDA of DKK 2 million (Q3 2017: DKK 2 million).
Outlook for 2018
Goodvalley maintains the recently updated expectations for revenue of DKK 1,400-1,550 million and Adjusted EBITDA of DKK 220-250 million in 2018.
We maintained strong operational performance in Q3 2018, while our financials were significantly impacted by tough weather conditions and market volatility in the wake of the drought this summer and a general oversupply of pork across Europe. We faced severe headwinds across our business and had to adjust expectations during the quarter, but in spite of the general lack of profitability in our sector, especially within the EU, we still expect to generate strong earnings. We continued to invest in our business as we launched our own branded products in Poland and completed a number of stable upgrades to increase capacity, animal welfare and efficiency going forward says CEO Tom Axelgaard
Financial highlights
| DKK million | Q3 2018 | Q3 2017 | 9m 2018 | 9m 2017 |
| Revenue | 377 | 446 | 1,102 | 1,232 |
| EBITDA | 40 | 111 | 210 | 386 |
| Adjusted EBITDA | 35 | 115 | 190 | 336 |
| Adjusted EBITDA margin | 9.2% | 25.8% | 17.3% | 27.3% |
| Adjusted profit** | (6) | 60 | 57 | 186 |
| Free cash flow | (33) | 61 | (68) | 143 |
| Net interest bearing debt | - | - | 1,178 | 1,186 |
* Adjusted EBITDA refers to EBITDA adjusted for herd price changes and non-recurring items, cf. page 3 in the Q3 report.
* * Adjusted profit refers to profit adjusted for herd price changes, exchange rate adjustments and non-recurring items, cf. page 4 in the Q3 report.
Conference call
On 27 November 2018 at 11.00 (CET), Goodvalley will host a conference call at which CEO Tom Axelgaard and CFO Hans Henrik Pedersen will provide comments on financial and operational performance in Q3 2018, the outlook and answer questions. Registration is not required.
The conference call will be conducted in English and can be followed live here:
https://edge.media-server.com/m6/p/da9tvvrf
Participants should dial the numbers provided below and state conference code 7087780
Denmark:.................... +45 35 15 80 49
Norway:....................... +47 2100 2610
Sweden:...................... +46 (0)8 5664 2753
United Kingdom:........ +44 (0)330 336 9127
United States:............. +1 323-994-2082
Contact information
Tom Axelgaard, CEO,
Hans Henrik Pedersen, CFO
Tel.: +45 7652 2001
Goodvalley at glance
Goodvalley is an international producer of high quality pork products operating in Poland, Ukraine and Russia based on Danish production standards. The company is to a large extent self-sufficient and masters the whole production chain from field to fork, from growing crops for feed, breeding and slaughtering pigs including using the manure in biogas facilities to produce electricity and organic fertilizer for the fields. In Poland, Goodvalley is certified as CO2 neutral in the entire production chain by German TüV and operates according to the highest standards in terms of animal welfare, transparency in the production and sustainable production methods.
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