Shares in FirstFarms came close to decade highs after the eastern European milk-to-corn group lifted its full-year profits hopes again, this time noting improved pig prices.
Shares in the Copenhagen-listed group touched DKK 70.50 in morning deals, touching DKK 70.00 for the only the sixth time in the past decade, before easing back to DKK 68.50, up 1.5% on the day.
The highest price for the stock over the past 10 years is the DKK 75.00 reached in August 2010.
The gains came as FirstFarms, which operates in Hungary, Romania and Slovakia, raised its forecast for its ebitda (earnings before interest, taxation, depreciation and amortisation) for 2019 to DKK 80m-85m, from DKK75m-80m, and for operating profits to DKK 33m-38m from DKK 30m-35m.
The upgrade followed a month after the company raised its guidance for ebitda from 67m-71m, and for operating profits from 25m-30m, citing the takeover of Hospoda Invest, with a pig operation boasting 2,300 sows, and cropping operation over 1,500 hectares.
‘All made progress’
FirstFarms said on Tuesday that its three operating arms – crops, milk and pork – had “all made progress” in the first half of the year.
“We expect a good result for 2019, and thus adjust upwards our expectations,” said Anders Norgaard, the group’s chief executive, adding that “it is going well in FirstFarms”.
The group reported earnings for the April-to-June period up 12-fold year on year at DKK 5.47m, on turnover up 6.0% at DKK 52.92m.
‘Higher pig prices’
FirstFarms said it was expecting, as regards its dairy operation, a flat performance in the second half of 2019, compared with the first half.
For crops, yields of spring crops were seen meeting expectations, while those of winter crops had proved “marginally lower than budget”.
However, for the pork operations, it flagged a sharp improvement in piglet and slaughter pig prices after a “below budget” first three months of 2019.
“Higher pig prices in the rest of 2019 are expected.”
The outlook comes against a backdrop of buoyant European Union pig prices, which the European Commission pegged at E181.50 per 100 kilogrammes carcass weight as of last week, up 20% year on year.
While pig slaughter for the first five months of 2019, the latest data available, was down 0.7%, led by a 7.0% decline in Danish numbers, demand has been supported by the knock-on effects of African swine fever on pig herds in China and Vietnam.
EU exports pf pig products rose by 15.4% to 1.88m tonnes, carcass weight, in the first five months of 2019, with volumes to China soaring by 43%.