Royal FloraHolland hit with €17M loss

Staff
5 Min Read

2023 was a difficult and unpredictable year for many growers. Volume was 3.2% lower than in 2022. Average selling price (ASP) was slightly higher than in 2022 at 2.2% but well below the inflation experienced across the sector. Margins were under pressure throughout the floriculture chain. Royal FloraHolland’s operating profit after tax was a loss of 17 million euros. At the same time, this was the year of many successfully implemented milestones and historic changes in the cooperative. This made 2023 a year with two faces. In 2024, the main priority will be to return to profitability, while the major strategic changes will enter their final phase. The expectation for 2024 is a break-even result, thanks to a tight budget, an already implemented tariff increase, and cost savings – both short and long-term. This is according to Royal FloraHolland’s annual report, published on 2 April 2024.

Milestones
Steven van Schilfgaarde: “As a cooperative, we are proud to have achieved a number of important strategic milestones in 2023. We have made great progress in harmonizing our logistics hubs. We are now in the final phase of the 2008 merger. We are phasing out all of our old IT. We now have an innovative and much more robust IT infrastructure with digital logistics, the prelude to the Royal FloraHolland platform, digital trading, and logistics. Our digital trading platform, Floriday, grows with supply and demand and in functionality. Last year, more than two billion euros in direct product sales passed through Floriday on an annual basis. With our logistics platform, we’re committed to high delivery reliability through logistics optimization, enabling efficient delivery from grower to buyer. And we have introduced time-slot delivery (Select delivery), made possible by order picking, which gives customers a choice of delivery times. Another milestone was the introduction of central auctioning of roses in November. “We have been talking about central auctioning since the merger in 2008. Back then, we called it national auctioning. Rose is the biggest product group. By the end of 2023, almost 30 percent of clock sales will be auctioned centrally.” By bringing together more supply and demand, we encourage optimal pricing. In this way, we are gradually moving towards location-independent auctioning, in which our three logistics hubs play a key role. A particular milestone for the cooperative was the Members’ Council’s decision to replace the standard membership with four types of member packs. These were introduced with effect from 1 January 2024. On the important subject of sustainability, it was decided at the end of March 2024 that from 2027 all growers trading through Royal FloraHolland must have a sustainability certificate.

Strong financial base
Royal FloraHolland has a strong financial base. CFO David van Mechelen: “It was expected that we would make a loss in 2023, but it is higher than we originally thought. In 2023, we again saw high inflation, rising global energy and raw material prices, as well as higher labor and transport costs. The combination of economies of scale (growth) and productivity improvements is needed to offset the effects of inflation. However, growth did not materialize. Due to the challenging market conditions for our members and the market in 2022, we have already opted for relatively limited and, therefore, not cost-covering tariff increases for 2023. In 2023, our total operating income increased by only 7 million euros, partly as a result. Our wage costs will increase by EUR 16 million in 2023 compared to 2022, partly due to the new collective labor agreement. Energy costs were EUR 6 million higher due to energy already purchased. As a result, the operating result before interest, taxes, depreciation, and amortization (EBITDA) was 51 million euros, 21 million euros less than in 2022. Royal FloraHolland is almost entirely indebted to its own members in the form of certificates. Van Mechelen: “The structure and terms of member financing provide a lot of comfort and stability. I also notice that the banks have a lot of confidence in Royal FloraHolland’s strategy and position. We have now agreed on new bank financing for the coming years.

Click here to view the annual report

Source: Royal FloraHolland.

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