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fenaco cooperative presents 2023 annual report

Nice business results for convenience and new, fresh brand Inoverde

"A solid and overall positive business year, marked by volatile raw material markets and the aftermath of the previous crisis years," began Martin Keller, Chairman of the Executive Board, at the press conference presenting fenaco cooperative's balance sheet, following the welcome by Pierre-André Geiser, President of the Board of Directors. "Costs were high, demand was sometimes weak, a rainy spring business in the LANDI stores, and below-average harvests presented challenges. On the other hand, there was also much to be pleased about. Net revenue fell by 6.5 percent compared to the previous year to CHF 7.54 billion. In 2022, extraordinary price effects had driven growth, but the situation normalized in 2023. This is the second-highest net revenue in the company's history."

The developments in the food industry and retail sectors were positive. "The food industry sector grew nicely. Net revenue increased by 4.3 percent to CHF 1.51 billion - partly due to prices, partly to real growth. However, high production costs impacted the result. The retail sector surprised positively with a net revenue of CHF 2.29 billion."

EBIT satisfactory despite decline
"EBIT fell to CHF 107 million due to costs, with a net revenue return of 1.4 percent, we are just below our target and the multi-year average. All in all, the EBIT is still satisfactory." There were significant investments like the gradual introduction of SAP in the finance sector. And unique costs arose in connection with the 30th anniversary. "We are pleased with the development of the company's results. It is significantly above last year at CHF 97 million. We benefited from the increased interest rates and achieved good financial returns. Last year, special effects also strongly influenced the result."

Equity ratio exceeds target mark
"The equity ratio is now at 63.1 percent (2022: 59.5 percent). It's a threshold number that particularly pleases me. When I took over as head of the Executive Board, the equity ratio was around 40 percent. Now, we have significantly surpassed the target mark of 60 percent for the first time. We also involved our members in this overall pleasing development. On the occasion of the 30-year anniversary, we permanently increased the fenaco success participation for active farmers." In total, 13,727 members benefit from this.

"The new agricultural center in Lyssach; 30,000 sqm of concentrated agricultural expertise. We invested over CHF 26 million here alone. Among other things, the site houses Switzerland's largest seed storage facility, measuring 6,000 sqm."

There were also several investments. "Last year, we invested CHF 155.5 million in modernizing and expanding infrastructures and facilities, as well as in digitalization projects." fenaco also feels the shortage of skilled and labor workers. "It is all the more important that we continue to invest in our attractiveness as an employer. As of 01.01.2024, we increased our total wage sum by just over two percent. At the same time, various projects are underway at fenaco, e.g., in the areas of talent and junior staff development."

Martin Keller, Chairman of the fenaco Executive Board.

The year from the perspective of agriculture
Swiss agriculture faced several problems in 2023. "In crop production, farmers struggled with wetness, drought, and heat. On the other hand, they lacked effective plant protection products due to regulatory measures. For example, the potato harvest was significantly below the 90 percent domestic supply for the third year in a row."

"This representation is, of course, not scientific. Nonetheless, you can see in the historical comparison the problematic development in crop production with increasingly low-yield years. Therefore, focusing the current discussions about the income situation of farming families solely on producer prices would fall short. Good and fair purchase prices are beyond question for fenaco. At the same time, farmers need more yield security again. The best guide price is of no use to a farming family if the harvest fails completely."

Sustainability strategy in photovoltaic energy exceeded
The company also achieved another significant goal: The share of photovoltaic energy from its own plants in total electricity consumption, which according to the sustainability strategy should be at least ten percent by 2025, rose to 10.5 percent. "A core element of our efforts in the PV area is our AGROsolar plants. By combining solar systems with battery storage, farms can increase their self-sufficiency in the energy sector. Currently, 64 such facilities are in operation, and over 20 more are in planning."

Convenience and Inoverde
In the Convenience business area, frigemo specializes in the production and marketing of high-quality potato, vegetable, and fruit products. Both in the retail and gastronomy sectors, frigemo exceeded the strong previous year's sales and gained market shares thanks to orders from new customers. Weak harvests domestically and abroad led to a difficult procurement situation and high raw material prices. Nonetheless, supply availability was guaranteed throughout the year. The regional trading companies achieved a record revenue. The result is particularly due to the complete recovery of the gastronomy market. While community catering still remained below the pre-corona level, other segments increased.

The Freshness business area successfully launched the new brand Inoverde. The name fenaco Landesprodukte thus disappeared from the market. To remain competitive, Inoverde continuously develops its site strategy. In this context, Inoverde consistently focused the Freshness Platform Seeland in Ins (BE) on fresh vegetables and relocated the processing of fresh potatoes and storage vegetables to Bätterkinden (BE). In Etoy (VD), a previously rented core fruit storage facility with a capacity of 1,800 tons was purchased. Except for carrots, the harvests in all relevant product categories were below average, with significant regional differences. Inoverde's inventory levels are therefore below target values. The situation with potato planting material is particularly tense. However, market demand developed overall pleasingly, especially for processing potatoes and in the organic segment. With the latter, Inoverde was able to grow by over 10 percent

Outlook for 2024
"We have started as planned and look cautiously positive at the coming months. By the end of the year, we expect net revenue to be approximately at the level of 2023. The cost situation is likely to remain tense. However, special expenses that were recorded in 2023 will not recur. In total, EBIT and the company's results should therefore slightly improve compared to the previous year."

Left to right: Michael Feitknecht, Markus Hämmerli, and Jürg Friedli

Next year, there will also be a generational change in the Executive Board: Michael Feitknecht will become the Chairman of the Executive Board, Markus Hämmerli will take over the management of the Agricultural Division, and Jürg Friedli will head the Crop Production Department. "At the end of June 2025, I will step down after 13 years as Chairman of the Executive Board. I believe the timing is right for both fenaco and myself. I am pleased that the Board of Directors has found an ideal successor in Michael Feitknecht," said Keller.

"The fenaco cooperative, as an agricultural company serving agriculture, is on course," Keller concluded. "Thanks to the solid foundation we have built over the past years, good liquidity, and a high equity ratio, as well as a long-term strategy, we can continue to invest in the further development of Swiss agriculture and food industry despite the current challenging cost situation, thus fulfilling our purpose in the future."

Click here to access the fenaco 2023 Annual Report.

For more information:
fenaco cooperative
Erlachstrasse 5
P.O. Box
3001 Bern
Tel: +41 58 434 00 00
Email: [email protected]