NAALDWIJK, Netherlands: Royal FloraHolland had an ‘exceptionally good year’ in 2021, according to chief executive Steven van Schilfgaarde with product turnover in the marketplace amounting to € 5.6 billion, an increase of 21 per cent in comparison to 2020.
In 2021, 11.7 billion flowers and plants changed owners at the world’s largest floral trade hub, 3 per cent more than in 2020. Royal FloraHolland’s operating income was 15 per cent higher than in 2020, mainly due to an increase in product turnover as a result of higher prices. This contributed to a positive result after tax of € 6.5 million, whereas there was a loss of € 5.8 million in 2020. The good figures for 2021 are overshadowed by concerns about the future of the floriculture industry, partly due to the situation in Ukraine and the high energy prices.
Concerns about the future of the floriculture industry
After a great start in 2022, the demand for flowers and plants fell sharply at the end of February due to the situation in Ukraine. Energy prices were already high at the end of 2021. They rose to extreme heights from late February onwards. CEO Steven van Schilfgaarde: “There is a drop in demand, considerable uncertainty in the market and falling consumer confidence. The necessary energy transition cannot be achieved overnight, while high costs leave growers with little room to invest. The international position of the Dutch floriculture industry is at stake. Without government measures, I foresee lasting damage being caused to our sector”.
Exceptional year
Looking back at 2021, it is safe to say that the international demand for flowers and plants remained at a high level in times of coronavirus. This is the main explanation for the good price development. CEO Steven van Schilfgaarde: “The year was also exceptional due to the heated discussions within the cooperative in the first six months about the pace of strategy implementation, the functionality of Floriday and environmental certification. Partly due to clear signals from the Members’ Council and based on concerns in the market, we have very deliberately opted for a different approach in the roll-out of our strategy. I can honestly say that never in the history of our cooperative has so much structured dialogue taken place with and between our stakeholders as in the past year. We truly are a different cooperative and company now than we were at the beginning of 2021”.
Strategy on track
Throughout 2021, Royal FloraHolland continued to invest in strategic projects, such as the digital trading platform Floriday and One Auction. Van Schilfgaarde: “The essence of the strategy remains the transformation of a physical marketplace into a digital B2B floriculture platform. Floriday will ensure that we can preserve the most powerful marketplace in the world, together. With the ongoing implementation of the strategy, we will endeavour to involve more growers and buyers than previously. We will focus on customised solutions and move away from the ‘one size fits all’ approach.”
Financially sound, but a difficult outlook
Thanks to the good results, the financial position has been strengthened further in 2021. Royal FloraHolland is financially healthy and is investing heavily in the future. CFO David van Mechelen: “In April last year, I expressed a cautious expectation that we would be able to break even. Higher product turnover due to strong pricing resulted in higher revenue from commissions. The result after tax amounts to € 6.5 million. Furthermore, in view of the current steep rise in our own energy costs, we will make efforts to cut costs wherever possible. We are anticipating a loss for the current year due to high energy prices and rapidly changing market conditions that will have an impact on supply volumes and product prices”.
Investments
In 2021, Royal FloraHolland invested € 68 million, 21.6 per cent more than the year before. Van Mechelen: “We took major steps last year with the Basics Right programme. After all, it is crucial that RFH, as a professional service provider, has its processes in order and is ready for the future. In doing so, we have strengthened and, where possible, digitised our basic processes to provide better services and customer experience. Moreover, we have invested heavily in strategy and transformation. Examples include investments in Floriday, in New Logistics with order picking and in real estate, such as with the inauguration of the Floradôme in Aalsmeer and with the first steps in the development of Aalsmeer Oost. Moreover, we did not have to borrow money for those investments in 2021. In fact, not only did we finance the investments from our own cash flow, but we were also able to reduce the bank debt to almost zero
