Hello, and welcome to the presentation ForFarmers first half year 2023 results call. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star z ero, and you will be connected to an operator. I will now hand you over to your host, Caroline Vogelzang, to begin today's conference. Thank you.
Thank you, Laura. Good morning, all. Welcome to our audio webcast, in which we will present the first half year 2023 results for ForFarmers. I'm joined here today with our CEO, Pieter Wolleswinkel, whom you all know, and Roeland Tjebbes, our CFO, whom you also all know. They will lead you through the presentation, which we've posted this morning on our corporate site, just after we published the press release. The audio webcast, because you know that this webcast will be taped, and we will post the audio webcast on our corporate site afterwards for all of those who want to re-listen to what is being said this morning.
Before we start, I would like to draw your attention again to the disclaimer statement, in which we state that all forward-looking statements are done based on the knowledge that we have today, and we know, that, you know, what we know today could very well be very different tomorrow. With that, let me pass the floor to Pieter, please.
Yes, thanks, Caroline Vogelzang. I will first talk about the key events of the first six months, give a deeper dive on the market developments before we move to the financials that Roeland will present. After that, I'll zoom in further on our Strategy 2025 execution. Let me start with the good thing that there's now stability in the executive board. We've had changes from a CEO leadership, as you are all aware of, and it's good that there's now stability in the team, especially given our importance to execute the strategy that we announced in November last year. The first six months of this year, we worked hard on the reorganization.
We addressed last year that we believe in strong local ownership in the business that we are in. We have organized ourselves in such a way that we strengthen the local teams and also reduce the number of management positions to make sure our agility is increasing. We've also said in our strategy, it's time to make choices. We cannot do everything anymore. Therefore, time to make choices. Unfortunately, the joint venture in the U.K. is canceled. We look now at our plan B, that I will elaborate further on later on in this presentation. We've sold our Belgium compound feed activities. We are very pleased that in July last month, we could announce the acquisition of Piast in Poland. Choices are being made. That is a very good development.
We look at our customers, sustainability and the sustainability transition is high on their agenda. We are very pleased to see, despite the fact that the politics don't always come with a solution, that the market is developing, and we see many farmers that are making progress in their carbon footprint. What we've also seen, relatively high prices for meat and eggs, so that is good for our farmers, despite the fact that compound feed is still relatively expensive. The dairy price has been more under pressure and has been sliding somewhat away. We zoom in on market circumstances, it also directly affect ForFarmers. I would like to mention three. The first is that we've seen a steep decline of the commodities, raw materials, energies, and fertilizer, and that has affected our business.
We've also seen the hyperinflation, and that hyperinflation has led to a change of consumer behavior, so their consumption of animal protein has changed. For example, also, we've seen a change from organic feed to conventional feed, and that is a trend that we have not seen over the past 10 years. We've also seen that, especially given the reduction of herd size, especially in the pig industry, more price competition, and that affects us quite obviously and has played a big role in the reduction of volume that we see, and also given, therefore, margin pressure. 2023 has brought quite a lot of incidental costs.
We see this year as a transition year in which the execution of the strategy and also much more cost focus will lead to additional costs in this year. I will zoom in later on that. What does that mean if we quantify and we compare ourselves with the first six months of 2022? We know that that was a relatively strong period, especially the second quarter. We see a decline of our total volume with approximately 4.8% towards 4.3 million tons of feed. We've seen a decline of our EBITDA to EUR 26.5 million. We've seen an incidental cost of approximately EUR 10 million, and Roeland Tjebbes will later on zoom in on those costs.
If we then zoom in further on the market developments, nitrogen is still quite clear on the agenda, especially in the Netherlands and Belgium. Both countries, we don't see solution coming from the politics, and have not seen too much progress, so still uncertainty. That means that the market needs to develop also partly by themselves. We've see, for example, seen in the first six months that there's now the full transition to the better welfare conditions of the broilers in the Netherlands towards the retailers, and I think that's good. Despite the fact that it affects our volumes negatively, we believe that these type of steps, for the longer term, ensure a solid poultry industry in the Netherlands, and that has taken place.
All in all, if we look to the pig industry in the Netherlands, Belgium, Germany, and the U.K., we see a decline, and obviously that is concerning us. On the other hand, we have seen also, driven by the lower animal numbers, quite a steep increase of the pig meat prices, and that helps us as well to ensure we get the bills paid in time, and progress has been made on that one. If we zoom in on Germany, we see that especially the poultry industry is developing good. There's a good consumer demand for meat and eggs, and that helps us to compensate for the decline in the pig industry. We're shifting more, especially to layers. We have a very nice, we call it hotel farming, full service model that strengthens our position and that supports the German business.
If we go further to the east, we see Poland had an extraordinary 2022, given the Ukraine crisis, the refugees coming to Poland, and also the poultry industry, basically disappearing in the Ukraine, obviously boosted Poland. We were quite looking with some kind of concerns, how that would develop in 2023, but we're very positive on that one. Given the strong performance of ForFarmers Starzen mix, we really see that the volumes are at a high level. If we go fully to the west, to the U.K., we see that the dairy industry had a stable year, and we were able to strengthen our position, so that is for us very promising also towards the future.
On the other side, if we look at the poultry and the pig industry, we have concerns. We see that on one side there's a decline, especially in the pig industry, but also more movement towards the integration model, so where the slaughters house produces their own feeds. We aim for the free market, as we call it, so that means that the free market is declining, so that is giving concerns, and later on I'll zoom in on that one. All in all, if we look at our key events as well as at the market developments, we are confident that our second half of the year will be better than the first half of the year.
We're working on the right things, and the execution of the strategy gives us the confidence to come with that comment. With that, I would like to hand over to Roeland to deep dive on the first six months.
Yeah, thank you, Peter. Good morning, everyone, also from my side. I would like to discuss the financial results over the first half of 2023, and I will do so in comparing with the first half of last year. On the first slide, I will focus on the underlying EBITDA development, so the underlying results. This is excluding our incidental items, and as always, we have a separate slide for those incidental items. Our main driver, of course, for our result is the, is the volume, and you can see that the volume of compound feeds in the first half of this year declined to 6%. Like Peter already discussed a bit, the biggest deviation is in the pig sector and also in the layer sector.
The pig sector, we see some different elements there. One is being that we see less sows in the U.K., less sows lead, of course, to less finisher pigs, the whole pig industry is suffering from that, also we are when it comes to volume in the U.K. In other countries, like the Netherlands and Belgium, we see people stopping their business, which also has a big impact on the volume. That also, also leads to some fierce competition for volume, that leads to margin pressure, as you will see later.
The broiler sector itself is doing fantastically in Poland. What Peter already discussed after the Ukraine crisis, there's still very profitable volumes over there, which is helping our result. The Dutch operation is impacted, is lower volumes because of the welfare concepts which are increasing in the supermarkets of the Netherlands. In the U.K., we saw that the avian influenza had a big impact on the total volume to be produced in the U.K. The ruminant sector is quite stable, and we see a good success with growing market share in the U.K. As you can see, the total volumes are less in decline than the compound feed volumes.
That has to do with the good perform- or relatively good performance of the co-products, which are on a lower decline than the compound feed. Lower volumes will also lead to lower gross profit, and that's what you see as well, 8.7% down to last year, which is about EUR 22.5 million. The majority of the decline has to do obviously with the volume, but we also saw at the margin pressure and what we dis- already discussed in several countries which we are in, given that we are in competition for volume.
But we also saw a sharp decline in the fertilizer prices earlier this year, which had to do with industry picking up again after lower gas prices, and this, this impacted the fertilizer prices as well, and that impacted our gross profit. The underlying operating expenses are down with almost 3%, 2.9%, and the decline of these costs has to do, of course, with lower volumes. We also saw lower production costs, and especially on the energy side, so lower energy costs. We were also able to lower costs when it comes to number of FTE, so lower FTE. And there were 87 people or FTE, full-time equivalents, lower than the end of the year.
On the other hand, we saw higher costs because of the wage inflation. In several, of all countries, we see that wages came up. In the Netherlands, for example, 7%-8%, U.K., oh, sorry, Belgium, even 11%. Now, if you put it all together, you see that our EBITDA declined to EUR 26.5 million, which is about a 38% decline. The next slide, I will dive into the profit development, some elements out of our P&L. I will mention the underlying net finance results came down because of the higher EURIBOR, so we had to pay, pay more rent when comparing to last year, first half. Our result of HaBeMa, that's the profit of equity accounted investees.
HaBeMa is our 50/50 joint venture in Germany, which is focusing on two lines of business. One is selling feed and producing feed, the other one is the transshipment activities. Especially the latter makes made this good result. That's why you see the EUR 2.5 million on this on this line. The tax expenses are lower because of the lower result. If we then look at the underlying profit, you see that it's EUR 4.4 million, which is EUR 12.7 million lower than the year before. Like I said, we have incidental items of EUR 18.8 million. I will explain later.
It may be good to highlight here already, that the majority of this, of these incidental i-items have to do with the cost for this transition year, and we want to be prepared for the future, and that's why we had to take some additional costs this year, which we see as an incidental item. On the next slide, some of the profit ratios we are looking at, our ROTCE is 4.8%. It's ob- obviously came down because of the lower underlying, or sorry, lower profit, the lower EBIT, and that's why it's below our internal target, which we set for ourselves for 2025, which is 10%, as you are aware. You can also see that the underlying tax rate is 13.7%, which is in line with last year.
Now, the next slide is about the capital structure. Total assets obviously came down because of the lower prices for raw materials, so lower receivables and lower inventories. Equity is down with EUR 35 million. It has to do, of course, with the negative results. We, we have to take EUR 5.8, which lowers our equity, but we also paid out EUR 18 million of dividend last year, over last year, and we paid it out this year, of course, and that's what you see, that, equity is down with that amount. Working capital, as stated, lower than the year before, and also lower than the end of the year of last year.
The overdue receivables are well balanced at 10.1%, even in these difficult markets, which we are seeing, and we saw in the past, still, compared to where we came from since 2018, a good ratio. Net debt came down, or came up, excuse me, towards EUR 86.9 million, which is higher than the year before, and on the next slide, you will see that it's lower than last year. Of course, what you will see is that there's less EBITDA contribution, which impacts the net debt. Of course, we paid out the dividend, and we had our regular CapEx, and we invest in our factories and our plants, which is about EUR 14 million.
Of course, the lower working capital also helps in lowering the net debt. Speaking of which, on this slide, the cash flow statement, the cash flow development, on the bottom end, you see that last year it was EUR 95 million, so better than last year. That for the majority, has to do with the cash from operating activities, lower contribution from EBITDA, but higher contribution from the working capital coming in. Last year we had a cash out, and this year, a cash in. Our net cash in investing activities is the regular CapEx, at the EUR 40 million I discussed, and we also had a delayed payment, the second payment for our acquisition of the Hope, which we done 2.5 years ago.
The net cash used in the finance activities is obviously, the majority is about the dividend distribution, which we did based on the dividend of last year. The alternative performance measures, the incidental items, like I said, it's much higher than the year before, especially because we take these costs in the transition year. Well, the first one is the impairment, EUR 4.7 million on EBIT, and we announced the sale of our Belgian operation, and when comparing the sales price to the book value, we had to take an impairment, and it's the EUR 4.7 million.
If you look at the column Restructuring, you will see that there is EUR 5.8 million on EBITDA on cost, that those are the costs of paying off people, which we have to say goodbye to. Also, the restructuring of the organization and closing, for example, of the Ingelmunster plant in Belgium, all led to this, this, this amount. We take these costs this year in order to be prepared for the future. It also has to do with the lower FTE, which we were which we have seen. The other column with big items is the business combinations and divestments.
Basically, the regular items which we always see, and has to do with the amortization on previously acquired intangibles, and it's the clients we have to evaluate when you buy a company, and you amortize on that amount. The net financing result of EUR 5.2 million has to do with the revaluation of the option of Poland. As you might be aware, that it's, it's because of the higher results, we also had to take a higher option, and that's why you see the EUR 5.2 million is a bit higher than last year. Now, maybe some words about the three different clusters we're having, and the Netherlands, Belgium is the first one, and then we also see Germany, Poland, and the last cluster is the U.K.
A bit of the repetition there, because also here we see in the Netherlands that there is a decline in volume 6.3%. We discussed that there is less pigs in the Netherlands and Belgium, because of stoppers, so people who stop their business. There was some competition, as we said, which led to volume pressure, and that's what you see in this cluster. Also the welfare concepts when it comes to the poultry sector, had a big impact on the lower volume for this cluster. We are happy with the balanced ruminant sector, predominantly cows, where we see stable volumes. Now, lower volume, as always, will lead to lower gross profit.
In this cluster, especially in this cluster, we saw the impact, like I already alluded a bit about, the sharp decline in the fertilizer prices, which led to lower gross profit for this cluster, for this cluster. The operating expenditures are also lower, so that's a positive effect. Don't forget, also here, we had to take inflation into account, wage inflation, which is impacting, of course, the cost for ourselves, and that is much higher than the mitigating lower cost because of lower FTE. In total, you will see that the EBITDA is EUR 12.7 million, which is about EUR 17 million lower than last year. Now, the results of Germany and Poland, a bit of a mixed bag when looking at volume.
There's very positive contribution out of the Polish operation and with the new customers and good volumes in Poland. We saw a big decline in the pig sector in Germany. It's the mar-- of course, a market effect, less animals in Germany on the pig sector. There's also some deliberate choices and focus on margin and less on volume in order to have a good differentiation of our strategies over there. And that helped out there, because looking at gross profit, you will see that the gross profit is higher than the year before because of this focus on margin, and of course, because of the good volumes which we saw in Poland.
In total, the EBITDA for this cluster is up with EUR 1.5 million to EUR 12.5 million. As you can see on the bottom end, the ROTCE for this cluster increased quite a lot and is above the target of 10%. The last cluster is the U.K. When looking at volume, you will see that this is the smallest decline or it's 1.5% down compared to last year. We see good performance in the ruminant sector, where we are increasing our market share, as we see a sharp decline in both pig and poultry.
The pig sector is down because of less animals, so the, the, what we already discussed a bit, 40% less sows, leading to 10% less pigs in this year, which is, of course, impacting the markets. We saw in the poultry sector that the avian influenza had a big impact, but also there we see that because of high prices for poultry meat, that the consumers are also eating less poultry meat, and that also impacted the total volume for this cluster. The gross profit because of these effects, especially on the lower volumes, came down.
As you can see, that the total EBITDA for this cluster is EUR 4.5 million, which is lower than last year, and the ROTCE is not where we want it to be. That, in a nutshell, or, in fast track, is the results of the first half, and I would like to give it back to Peter, who will dive into the update of our Strategy 2025.
Yeah. Thanks, Roeland. Indeed, November last year, we announced our revised Strategy 2025, given the market developments, given the market volatility. We also indicated that point in time that it's crucial to move quickly in an execution modus, and that was, is what we have been doing over the past six months. If we look at what we said, the five strategic principles, I'd like to start with even closer to the farmers, even closer to the customers. It is vital to be agile in the environment that we are in. We see that the developments, market prices, herd size, et cetera, are moving quickly, and we believe in local ownership to quickly respond to that. We have organized ourselves in such a way that we can provide an answer as quick as possible.
That led it to stronger local teams, a leaner group function, less management positions. We could reduce approximately 30 management roles and overall, an overall reduction of personnel of approximately 100 FTE that we have nearly achieved already. If we then look at differentiating, obviously, day-to-day, we want to make a difference at the farmers level, but also strategically, we've looked critical: what is for us the area of growth towards the future? Where do we need to improve, but also, where do we see that we cannot make sufficient difference?
As an example, Belgium, we see that in the Belgian market, consolidation is vital, but we are not the party to consolidate, and based on that, we've come to the decision to divest our Belgian compound feed activities, and we hope for a quick response from the competition authorities to ensure we can close the deal. If we look to Poland, we're very happy as, as we see it, as a growth market and the announcement of the acquisition of Piast. I'll zoom in on that on the next slide. I also would like to elaborate on the U.K. Early this year, we needed to announce that we would cancel the joint venture that we intended to start with 2Agriculture.
That meant for us, and that's also what we addressed, we need to work, work towards a plan B. What does that mean? We see that the dairy industry is developing in a solid way, and there is an opportunity for us with the way we serve our customers, the broad product portfolio that we have, we can make the difference, and also, in the first six months, we have strengthened our position. We need to be realistic on the poultry and the swine industry. That is moving more and more towards an integration model, as I just described. It's vital for us to adjust our service model and really work with a lean team.
We've made steps on that one, and also we look, especially also in this field, how we can, via corporations, improve our situation. On that last point, it's too early to further on elaborate what that means, but we are working hard on the structural improvement of the U.K. results. In the middle, you'll read, "Good feed at a competitive price," and it's not by coincidence in the middle, because it's the heart of our daily business, and especially also, if we now look at the, the Dutch situation, we want to improve, we want to strengthen, and we want to have a better volume development than what we've seen over the past 6 months.
We use our expertise, and also by improving our cost position, to ensure we can have sharp feed prices, as we call it, and be better than our competition. That is clearly our ambition in the Dutch market. We are the leading company, and we want to remain the leading company. If we then look at the sustainability transition, high on the agenda, ForFarmers wants to be part of the solution in the transition that is ahead of us in the agricultural environment. If we then look to the on the farm, the solutions that we can provide, we see very nice examples. I'd like to mention two. First is on the use of co-products. Co-products coming from the food industry that are not usable anymore for human consumption.
We pick them up, we use them either in our feeds, feeds or deliver them directly on farm, and that's a great way to reduce the carbon footprint of feed, and with that, of animal protein. We're making progress. We will now brand it under circular to express further our importance in this field. We started in the Dutch for the Dutch dairy farmers, an innovation fund. That means that farmers can use vouchers at our consultancy firm, FarmConsult. That's part of the ForFarmers group. They support farmers with, for example, permits, but also with advising on how to use-...
the manure disposal on farm in a better way to ensure that on one side, the sustainability is improved on that, but also that money can be made out of that, and that help s the situation at the dairy farm. Also this, we want to support our farmers on that. We also clearly expressed in November that we cannot do it on our own. If you look at our margins, they are low, that is quite clear, and that means that there's not so much room to invest in our feeds to improve. We need to pick it up in the chain, obviously with farmers, but also with the processes. Step by step, we see that steps are being made.
Especially in a research environment, we started a great project together with, for example, Nestlé, to reduce the carbon footprint of milk in 2030 by 50%. We are convinced that these type of cooperations offer a solution towards the future. By taking a chain approach, and we've also seen that, for example, in the poultry industry and the way we cooperate with slaughterhouses, that helps tremendously to make progress.
All in all, if I look back, and I also speak on behalf of Roeland, on the past six months, with regards to the execution of our strategy, we are very pleased to see that we are really in an execution mode at this point in time, and though that also gives us the confidence to speak out that we expect a better second half than first half. Coming to an end, I first would like to provide some more information on our acquisition of Piast in Poland. The financials will be disclosed at the moment of closing, but already to give you a bit more impression on the steps that we intend to take. If we first look at the right on the slide, you will see Poland.
In amber, you see the three current factories that ForFarmers Tasomix has, so two in the middle and one, the new factory in the east. If we look at red, those are the locations, part of Piast, family, owned company, strongly focused at poultry feeds. That is matching exactly what we also do with ForFarmers Tasomix, approximately 400,000 tons with 200 employees. We especially also, if we look at the factory, see that on one side, we can specialize further, especially if we look to Wielkopolski, that is close to our plant in Biskupice, in the middle of Poland, but also with three locations, more towards the north, that provides a geographical opportunity to, on one side, work more efficient, but also clearly supports us in our growth ambition.
We expect that closing can take place in before the end of the year, after approval of the Polish Competition Authority. It's a very important part in our Strategy 2025, to strengthen our position in Poland, and therefore, once again, pleased that we could announce this step. With that, I would like to hand over to you, Caroline.
Thank you, Peter. Laura, could you please open up the Q&A?
Sure. Thank you, Caroline. Ladies and gentlemen, once again, as a reminder , if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll take our first question from Guy Sips at KBC Securities. Your line is open. Please go ahead.
Yes, thank you. Thank you for taking my questions. First question is on, on the stability in the executive board. Can you give us a little bit more color on, on the impact of, on the timing of the strategy, on the difference in the focus? The second question is on, on Germany. You mentioned the model of on-site farming in Germany. Can you elaborate a little bit on that? If, can you expand that to other countries? In the P&L, you, you mentioned non, a non-controlling interest of minus EUR 1.3 million related to ForFarmers using in Germany. Can you give some more insights on that? On the overdue receivables, at 10.1% on average, is there a difference between countries and can you see some evolutions in there?
On the transition costs of EUR 10.5 million, is there something that we can expect in the second half of this year or already for next year? On the EUR 4.7 million, on the impairment of the goodwill on the Belgian compound feed activities, is that a stable number, or can that still go up or down in the coming months? Last question on plan B in the U.K. What is the difference with plan A from a financial point of view? You mentioned that ROTCE in the U.K. is not where you want it to be. Can you give us some number, what you expect in the mid to longer time?
If you then give some numbers, can you also give your targets for, for other markets on, on the road shape for the next coming years? Thank you.
Many questions. Maybe I can start with, especially the first two on the development of the strategic plan, and the second question on the hotel farming.... If we look at the first one, we recognized somewhere in 2021 that there were so many developments, for example, the volatility in the market. That was even before the Ukraine crisis. We recognized that the development of the herd size was going in a decline in a harder pace than expected. The sustainability journey was accelerating. Based on that, end of 2021, we decided at that point in time to revise our strategy. In the board are still in the board.
We're involved from the beginning to the end, but it's quite obviously that the changes in CEOs have affected the process and have led to some delay. That's also why it's so vital that we are now really in the execution mode as of earlier this year. The good thing is also that, for example, in the cooperation with Theo, there was definitely no discussion on the direction of the strategy. Many of the preparations were already taken last year. That is to give some background on the timetable. Your second question was about the hotel farming. It's a concept where we really take ownership for the acquisition of the chicks, of the selling of the eggs, and the providing of the feed prices.
It's a full service model that makes sure that the farmer can really zoom in on taking care of the animals. It's a great model. It fits quite well in the German market, where many market, where many farmers also have other activities, especially edible farmer. It's not a concept that fits in every country or in every region. Indeed, we do look, can we use this also in other countries or other regions? It's a great way, and it's good to see that also in Germany, it really supports our position in the laying industry. With that, I think the other questions are higher on Roeland's list.
Yeah, thank you for the questions, Guy. Let's start with the non-controlling interest. What you see is that we consolidate 100% of our joint ventures on which we have control. For example, in the pacing, in this case, 40% of the result is not ours. That's pacing. That's why we need to take this minority shares into account. The second question I didn't, because I was writing down the first one, on receivables. That ca- I don't know exactly the question, but the recei-
Whether there's a difference per country.
Yeah, no, what you see is that it's basically all over, and it's to do with the lower raw material prices, so that leads to lower receivables. Of course, there are differences per country, yeah, that if you look, for example, at our receivables, so Days Sales Outstanding, which are different per country. Poland, for example, given the Polish industry is different than, for example, in the Netherlands, so there are lower payment terms in the Netherlands when compared to Poland. Poland have longer payment terms, especially, for example, in the Turkey industry. The main driver for the lower receivables is raw materials.
We see, for example, in Netherlands and Belgium, to pick one out, is that the pig sector health, there's more liquidity for the pig farmers, so they can pay in time, and that's also leading to some lower receivables for that matter. Basically, like I said, working capital levels down because of lower raw materials. You, we talked about the transition cost, which is, let's say, a little bit up, more than EUR 10 million. Indeed, Belgium should be a stable number because we negotiated the price with the sales party, and we know what our book value is, so it cannot deviate anymore. The EUR 4.7 is fixed. It will not change.
Mm-hmm.
Sorry. The, the, your other question was on, on the other part of the, of the restructuring, at the restructuring cost, the other part of the EUR 10.5 million. Yeah, that is of course, the cost we have taken so far. There could, there could be some, in the remainder of the year, but I don't expect it to be at the same level or as high, as high as in the first half. The majority have been taken, and there could be still some, some steps to take, and that could lead to some costs for transitional, for restructuring costs in the, in the second half. Your question on plan A, B, and what have we?
Yeah, we will not provide any guidance on what the numbers are and should have been when comparing A to B. Plan A was that we wanted to do a joint venture with 2Agriculture, and that unfortunately did not materialize, so that's why we are looking at other options. For sure, it's known in the market that we want all our operating companies to be at a return on average capital employed, above 10%, up and around 10%, a little bit depending on the country and whatever costs per country. Let's say 10%, they're obviously not there, so we need to get our act together there in order that we reach 10%.
We have guidance for 10%, which is by the end of 2025. It's not not for now, because also when we started the strategy, we were below that target of 10%, so we are working hard to grow towards this 10% by 2025. Per, per country, like I said, it differs depending on risk and and the average cost of capital. I think that answers the six questions you had, Guy.
Good. Thanks, Ro.
Thank you once again. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll now move on to our next question from Fernand de Boer at Degroof Petercam. Your line is open. Please go ahead.
Yes, good morning. Thank you for taking my questions. First of all, maybe I missed it, but could you give the amount of the release of the bad debt provision? That's the first question. Then on your EBITDA, I think last year there was a big difference in EBITDA per quarter. Has this now been more, let's say, the phasing of this EBITDA more, more similar, so similar EBITDA in Q1 as in Q2? Then if you look at your guidance, you're saying, okay, we are expecting a higher EBITDA in the second half than in the first half. But if I look at consensus numbers and also my own estimate, then we are looking at some EUR 40 million, and I know you normally give, don't give any guidance.
Looking at what's going on in the first half, the price pressure, could you give any idea if you feel comfortable with a EUR 40 million EBITDA provided by the analyst consensus? Then coming back on the U.K., maybe I didn't understand it correctly, but you say, okay, we make progress in the ruminant sector, where we gain some contracts, and the market is also moving positively in that direction. In pigs and in poultry, the market is more moving towards an integrated model. You, of course, not an integrated model. Did I understand correctly that actually your way out is maybe to get out of those poultry and pigs sector in the U.K.? Those are.
Thank you for your questions, sir. Yeah, thank you for your questions, Fernand. Start with the release of bad debt. It's not a big amount. It's about EUR 500,000. I think comparing-
Okay
... to last year, the deviation is a bit bigger, because last year we had to take an extra provision on bad debt. It's about EUR 2 million. That's why we mentioned in the press release. The release by itself is not that much, but compared to the last year it was a cost, and now it's a benefit. That's why we mentioned it. It all has to do with the liquidity in the pig sector, which is increasing and given the increased pricing of the farmers, of the, the, the, for the farmers, and that's helping so they can pay off their bill. That's one. Your second question was about the EBITDA per quarter.
Yeah, it's yeah, how to say this, it's, it's not balanced anymore. Last year, in Q2, we had a very strong quarter because at that moment, we were able to pass on raw materials to to our customers, and even more than that. It was, there was just exceptional from, from that matter, and Q1 last year was relatively low compared to previous quarters. Given the markets we're in and given the, the, the, the circumstances we have to deal with, it's hard to point out what, what nowadays are stable quarters.
From that matter, the, if you compare quarter to quarter, second, the, the second quarter for last year was far more better than the, the second quarter of this year. That's, that's for sure.
Could you say that Q2 this year was below Q1 this year?
It was up to this, if you, if you look. It, it's, it's a better up to Q1. Yeah.
Sorry, say that again. It's?
Up.
Okay. Okay.
It's.
Yeah
to Q1.
Oh, very good.
Your question on, can we quantify? We deliberately stay away from a true guidance. We say, we feel confident that the second half will be better than the first year. That, that is based, if we look at our current activities, that is based also that, for example, the fertilizer effect is mainly taking place in the first half. Based on that, we come to that conclusion. On the other side, let's be realistic, that there's still a lot going on in the world, macro economical, geopolitics. Based on that, we want to refrain from a true guidance. To answer your question, I have to say no comment, to be honest.
Your second question to me was around the pig and poultry situation in the U.K. We look at several options. We still see that we're not the only party that is suffering in the pig and the poultry industry, so that makes, by definition means that there will be opportunities that out of cooperations, progress can be made. For me, it's too early now to comment what that cooperation would mean, and in what form, in what region, but that is indeed high on the table to make sure we also make progress on that, because to achieve the ROTCE target that's just been indicated by Roeland, steps need to be taken. That is on the table.
Okay, I think maybe one last question on, on Poland. Because both now Tasomix and Piast have a strong position in poultry, so could you share us a little bit the combined market, market share of those two? You didn't disclose any details on profitability of Piast, price paid, et cetera. Yeah, it's, it's in tons, it's quite a big acquisition, but could you give us any idea?
As said, on the financial side, we will disclose at, at closing, so it's too early to elaborate on that one. If we look to the market share, it's a good step forward and, and, you can make an indication what that means. It's a sig-significant step up in our market share. On the other side, the Polish information is not, also not such that we can truly quantify that, especially given the dynamics that the country is in, also around the Ukraine situation. We won't quantify that further at this point in time.
Okay. Thank you.
Thank you. We have no further questions in queue currently. As a final reminder, if you would like to ask a question, press star 1 on your telephone keypad. Thank you. I see no further questions in queue. Yes, handing it back over to you, Caroline. Thank you.
Thank you, Laura. Yeah, I also saw that there are no further questions, but I know that you all know how to find us, and so please do reach out if you have any additional questions. Thank you all very much for joining, and hope to speak to you later.
Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Continue to stay safe. You may now disconnect.