Potato breeder Royal HZPC Group maintains forecasts

Potato breeder Royal HZPC Group maintains its forecasts for the 2022-2023 financial year. HZPC expects turnover to grow 11% from last year (then EUR 352 million (USD 386 million)) with a gross margin of EUR 66,5 million (USD 73 million) (last financial year EUR 63.9 million (USD 70 million).

The potato breeder operates with a financial year from 1 July to 30 June. 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) increase markedly compared to last year. The volume of traded seed potatoes is expected to increase limited. This trade mainly takes place in and from Europe.

The result grows mainly due to 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.

Gerard Backx, CEO of Royal HZPC Group:
 

"As mentioned in February, sales to southern Europe were initially slow due to the drought. However, these sales have continued for a long time, increasing overall sales."

Increase in EBITDA

HZPC managed to limit the increase in its operating costs to around 3% (last year EUR 50.7 million (USD 55.6). 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 EUR 13.2 million (USD 14.2).

Increase in financing costs and result

For decades, Royal HZPC Group has chosen to pay its growers advances early in the season. This requires external financing. Due to rising interest rates, this leads to higher financing costs. Currency effects, especially on the Argentine peso, also increase the costs.

The net result is expected to slightly exceed EUR 7 million (USD 7.6 million) (previous year EUR 7.051 million (USD 7.74)) This does not yet include the costs of the Connecting Growers program.

Harvest 2023

Gerard Backx about harvest 2023:
 

"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 can I not yet predict."

Access to healthy food in hard-to-reach areas

The drive of Royal HZPC Group is clear: people around the world should have access to healthy food. That is why the potato breeder is making every effort to continue supplying seed potatoes to all areas.

Despite all the difficulties and restrictions, for example in Yemen, it looks like Royal HZPC Group will continue to supply those areas with healthy starting material this year.

TLC Potatoes acquisition

HZPC UK, part of Royal HZPC Group, is pleased to announce the acquisition of TLC Potatoes Ltd; one of Scotland's leading mini tuber producers. This acquisition has no impact on the profit forecast for the 2022 / 2023 financial year.