Since the start of the corona crisis, Royal FloraHolland's turnover decreased by 350-400 million euros, a drop of 40 percent, Steven van Schilfgaarde (CEO) and David van Mechelen (CFO) said this morning in an online press conference, in which the annual report 2019 of the cooperation was presented.
Steven van Schilfgaarde
As positive as the year ended - 2019 was a financially good year, with a little more revenue and all parameters were a little bigger, more and better - so bad is the situation now. Actually, the main topic of discussion was not the annual figures of 2019, but those of 2020 and afterwards.
Major investments, like the maintenance of several large buildings, are being postponed. Also, they will cut the number of temporary and external workers. Despite an expected large loss for 2020, no acute financial problems will arise due to Royal FloraHolland's solid starting position, but costs need to be reduced. Van Mechelen: "We are well financed and maintain close contact with our banks. We also appeal to government support measures. Continuity of the cooperative and preservation of employment are of paramount importance to us. It goes without saying that the money we borrow under our credit facility must be recouped in the future. We will have to reduce our costs and adapt our business activities to the changes and new levels. Last year we reduced our costs. This year we will continue to do so, with even greater urgency. Investments in strategic programmes will increase our efficiency and accelerate the development of new business models and strengthen our market position".
Their strategy is focused on the period after the corona crisis. Van Schilfgaarde: “Over the past five weeks the sector has been hit very hard. I am confident that thanks to the government's emergency package and the € 600 million emergency fund, the sector will be able to get through this difficult period. When the crisis broke out, we were in good shape. I am confident that our sector is resilient. As soon as international demand recovers, we should be able to react immediately."
Fortunately, they see some bright spots, but there is still a long way to go. "We are fully committed to digitization, with all transactions in the market taking place digitally by the end of the year, and will continue even faster to prepare for the roll-out of 'Landelijk Veilen' (national auctioning) in 2021. These projects are preconditions for bringing our costs structurally down to a lower level."
David van Mechelen
What could be the structural effect of the corona crisis on the ornamental market? "Firstly we expect an economic recession, but we cannot estimate the size of it. Secondly, there might be market transformations. We do not expect the logistical chain to change, despite e-commerce growing even faster. Also the increase of direct sales and the decrease of sales via the Dutch auction system will accelerate."
That is the exact reason for this path they've chosen - further digitalization and development of new logistic and financial services. "For now, it is very important that, as soon as the borders open, that all infrastructure will be available. 85% of our ornamental industry is exported and luckily we see more and more bright spots."
In the marketplace of Royal FloraHolland, 12.3 billion flowers and plants were traded in 2019, an increase of 1.5%. Product turnover was € 4.8 billion, an increase of 3.1% compared to 2018. There were both higher volumes and higher prices. The flowers and plants were supplied by 5,406 suppliers and purchased by 2,458 buyers. Operating profit amounted to € 5.6 million thanks to lower operating expenses. This is reflected in the annual report 2019 published on 23 April 2020. This was published in the annual report 2019, click here to read it in Dutch. (The English version of the annual report will be published mid-May.)