Potato breeder Royal HZPC Group maintains its forecasts for the 2022-2023 financial year. The company announces in a press release that it anticipates an 11% increase in turnover from the previous year’s 352 million euros, with a projected gross margin of 66.5 million euros (up from 63.9 million euros).
The company’s financial year runs from July 1 to June 30. High international transport costs during the 2022-2023 financial year contributed to the rise in turnover, although these costs are expected to decrease in the coming year.
Increasing Volume and International Presence
Traded seed potatoes and licensed cultivation volumes are expected to grow significantly compared to last year. While the volume of traded seed potatoes will see a limited increase, the growth is primarily driven by non-European regions, such as Asia and America, where licensed cultivation occurs.
Royal HZPC Group expects a 17% increase in the volume of HZPC varieties traded by licensees compared to the previous year. Despite a slow start in southern Europe due to drought, sales have continued for an extended period, leading to increased overall sales, according to Gerard Backx, CEO of Royal HZPC Group.
Operating costs have been contained, with an increase of around 3% (last year at 50.7 million euros). As a result, Royal HZPC Group projects EBITDA (earnings before interest expenses, taxes, depreciation, and amortization) to rise by approximately 1 million euros from last year’s 13.2 million euros.
Rising Financing Costs and Net Result
Royal HZPC Group has traditionally paid growers advances early in the season, necessitating external financing. Increasing interest rates have led to higher financing costs, while currency fluctuations, particularly in the Argentine peso, have also contributed to increased expenses. The net result is projected to slightly surpass 7 million euros (previous year at 7.051 million euros), excluding Connecting Growers program costs.
Harvest 2023 Outlook
Gerard Backx expects a sector-wide decrease in certified seed potato production in Europe. He says: “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.”
Promoting Access to Healthy Food
Royal HZPC Group is committed to ensuring global access to healthy food and continues to supply seed potatoes to hard-to-reach areas despite challenges and restrictions. This year, the company expects to maintain deliveries of healthy starting material to regions such as Yemen.
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. Royal HZPC Group today communicated the acquisition.
Source: Royal HZPC Group
Photo: Credit Royal HZPC Group