10 May 2023
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Increasing transport and interest costs make their mark.
POTATO breeder Royal HZPC Group expects turnover to grow 11% from last year (then 352 million euros) with a gross margin of 66.5 million euros (last financial year 63.9 million euros), it has stated in its most recent forecast.
In financial year 2022-2023, international transport costs were remarkably high. This is a major reason for the increase in turnover. Transport costs are expected to decline in the coming year.
The overall tonnes (traded seed potatoes and licensed cultivation) increased markedly compared to last year. The volume of traded seed potatoes is expected to increase.
This trade mainly takes place in and from Europe. The resulting growth will mainly be because of areas outside Europe, where licensed cultivation takes place, mainly in Asia and America.
Royal HZPC Group expects its licensees to trade 17% more volume of HZPC varieties than a year earlier.
CEO Gerard Backx said: "As mentioned in February, sales to southern Europe were initially slow owing to the drought. However, these sales have continued for a long time, increasing overall sales."
HZPC managed to limit the increase in its operating costs to around 3% (last year 50.7 million euros). Thanks to these developments, Royal HZPC Group expects EBITDA (earnings before interest expenses, taxes, depreciation and amortization) to rise by around 1 million euros. Last year, EBITDA was 13.2 million euros.
Using external financing, Royal HZPC Group pays growers early in the season and this financing cost has increased as a result of rising interest rates. Currency effects, especially on the Argentine peso, also increase the costs.
The net result is expected to slightly exceed 7 million euros (previous year 7.051 million euros). This does not yet include the costs of the Connecting Growers program.
Gerard said: 'We expect the total area for production of certified seed potatoes in Europe to decrease sector-wide. This is because a number of growers choose to grow consumption potatoes for the french fries industry instead of seed potatoes. This will affect the expected availability of certified seed potatoes for the 2024 crop planting. Whether this will affect the expected results in financial year 2023-2024, I cannot yet predict."
