Wiesenhof soars high thanks to boost in demand: 17 percent growth in sales

PHW Group: 25 percent increase in sales from 1.27 billion to 1.59 billion euros / Sharp rise in demand for chicken and the origin concept boosts Wiesenhof brand / Animal Nutrition and Health business sector record 33 percent growth / More than 400 additional employees / Further major investments in Germany 

Rechterfeld / Hamburg, 15 February 2008. The PHW Group continues to grow and recorded an increase in sales of 25 percent to 1.59 billion euros in the financial year ended 2006/2007 (balance sheet date 30.06). In the core sector, Wiesenhof, sales rose by 17.4 percent to almost 900 million euros (previous year: 765.9 million euros). The main factor behind this significant growth was the sharp upsurge in demand for poultry. Per-capita consumption reached 17.2 kg in 2007 (previous year: 16.7 kg). The increase in prices for poultry products, which was necessary due to the strained raw materials market for feed, also affected sales. The ‘Animal Nutrition and Health’ and ‘Human Nutrition and Health’ divisions both recorded double-digit sales growth. 

The Wiesenhof quality and origin concept remains the key to the brand’s success – this concept focuses on the single source principle which includes clearly labelled poultry products, feed from the company’s own feed mills, GM-free soya and more than 800 contract farms. The benefits of this quality philosophy are reflected in the very high level of confidence shown by consumers and trade partners in the brand both at home and abroad. Wiesenhof achieved an increase in export sales of 44.6 million euros to 165.8 million euros. Around 25 million euros of this figure resulted from the expansion of the consolidated Group with the complete integration of the RWS Group. With double-digit growth, the product divisions ‘Convenience’, ‘Duck’ and ‘Wiesenhof Poultry Sausage’ also contributed to the positive development of the Wiesenhof sector.  

Boost in demand for Wiesenhof organic poultry 

Alongside the significant growth in the conventional sector, Wiesenhof also experienced greater demand for organic poultry. In response to this trend, the company has expanded its production capacities. Furthermore, Wiesenhof has converted its pasture-raised chicken project, which was awarded the Animal Welfare Award by the Bavarian state government in 2004 in Bavaria, to meet the requirements of the EU Organic Agriculture Regulation.   

Within the framework of the law approving the use of the labelling ‘GM-free’ which was passed by the German Federal Parliament, Wiesenhof plans to display this label on its products. Back in 2000, Wiesenhof turned its focus to GM-free soya from Brazil and now invests several million euros each year in a control system which extends from the Brazilian suppliers right through to the company's own feed mills.  

Business trend shaped by major increase in price of feed 

 The extreme rise in feed costs – in the poultry rearing sector, 60 percent of costs incurred were attributable to feed – shaped the business result in particular. These costs could not be offset in all divisions by the gradual increase in the sales price of poultry products in the financial year ended. Given the continuing high level of demand for feed components on the international market and the growing requirements of bio-energy, the PHW Group anticipates even higher feed prices. 

In the medium-term, this will contribute to a worldwide rise in the cost of poultry products.  

With a 50 percent increase in sales, both subsidiaries operating in the poultry sector in Poland, Drobimex and Bomadek, contributed to the growth of the PHW Group. Taken together, these companies grew from 67.4 million euros to 102.9 million euros.   

Poultry franchising also expanded considerably. This sector comprises parent stock husbandry, rearing farms and hatcheries, which are all located in Germany. In the 2006/2007 financial year, the revenue from sales was 93.1 million euros which amounts to a plus of 53.6 percent compared to the previous year (financial year 2005/2006: 60.6 million euros). The investment of 22 million euros made by the PHW Group last year in the construction of a hatchery in Rechterfeld represents one of the biggest single investments of recent times.  

Animal Nutrition and Health: 33 percent growth 

The Animal Nutrition and Health sector also enjoyed very positive growth. The mixed feed, feed additives and poultry vaccine business registered an increase in turnover from 304.6 million euros to 405.0 million euros. This represents growth of 33 percent. The mixed feed manufacturer, MEGA Tierernährung, recorded growth in sales of 34 percent to 211.9 million euros, and thus played a decisive role in this result. In the financial year ended, the company increased its production level by 17 percent and now produces 1.1 million tonnes of mixed feed each year. Since this operation is close to the Polish border, a plant in Eberswalde has been leased and the company MEGA Polska has been founded, which acts as the ‘bridgehead’ for the Eastern European market.   

Lohmann Animal Health (LAH) recorded growth in all business divisions. Sales in the financial year ended amounted to 148.8 million euros (previous year: 142.7 million euros). Each year, LAH spends around 6 million euros on the development of new products and research, including the development of an avian influenza (bird flu) marker vaccine against the virus H5N1. 

The German-based businesses, GePro Vertriebsgesselschaft in Diepholz and PetCom Tierernährung in Minden, accounted for 75 million euros of this sector. Whilst PetCom produces feed mixes for the pet food industry, GePro processes the by-products from abattoir operations. GePro, which was awarded the cooperation prize from the agriculture and nutrition industry in 2007, produces an average 1.8 million litres of biofuel on the basis of poultry fats each month (Poultry SP Power). More than 500 lorries in the PHW Group and other forwarding agencies are powered by this environmentally friendly and cheaper alternative to fuel. Thanks to the GePro innovation, up to 74,000 tonnes of CO2 are avoided annually.  

Human Nutrition and Health: 22.9 percent growth in sales

The increase in sales experienced by the food technology company Nutrilo (from 20.0 million euros to 29.1 million euros) can be attributed both to the price-related growth seen at home (+ 20.3 percent) and the significant increase in revenue from exports (+ 108 percent). The rise in exports is a result of Nutrilo's booming business in the USA. In order to support up the business in North America, the PHW Group founded a company in the US in the summer of 2007 in which it has a 75 percent share. 

TAD Pharma GmbH was able to increase sales by 14.4 percent in the financial year ended thanks to a diversification of its business and the development of the international business. As of the beginning of the current financial year 2007/08, TAD is no longer part of the PHW Group following the sale of the company to the Slovenian generics specialists KRKA.  

Personnel: 400 additional employees 

The jump from 4,228 to 4,645 employees is primarily the result of the growth of the foreign subsidiary Drobimex and the expansion of the consolidated Group. In addition, in various operations agency staff were replaced by permanent company employees. 

At 69.4 million euros, the level of investment remained at the high level of the previous year (69.8 million euros). The major areas of investment were the construction of the hatchery in Rechterfeld, increases in capacity at the farms and investments in technical equipment in order to optimise production processes in the abattoir and processing operations as well as environmental measures.  

In the current financial year, the PHW Group plans to invest further in the German sites. A second poultry vaccine plant is planned for Cuxhaven and at Nutrilo the construction of a development centre is already underway. In the Bavarian town of Bogen, the wing of the live animals supply centre is being reconstructed. In Rechterfeld, MEGA is currently expanding its raw goods warehouse by an additional 20 silos.  

Outlook: PHW anticipates growth in sales of 8 percent 

In the current financial year, the poultry markets have largely recovered, which can be put down to the considerable demand for poultry products. Despite the increase in consumer prices, the entire industry is characterised by an upward trend in sales. In Germany, consumers are favouring low-fat ‘light’ foods, which are a key factor in driving the growth of Wiesenhof. Given that the demand for poultry is increasing worldwide, the PHW Group anticipates growth in sales of 8 percent in the current financial year.