3 The grounds are laid for new ambitions By Christian Høegh-Andersen, Chairman of the Board of Directors, and Truels Damsgaard, Chief Executive Officer (CEO) We approached the financial year 2020/21 with a great deal of uncertainty; how would the world cope with the global Covid-19 pandemic? With haunting memories of the financial crisis, expectations for the year were low. With the year behind us, we are looking back on an unexpectedly strong market where lawn seed sales in particular skyrocketed, with EBIT up 32% on the previous record-breaking year 2019/20 and our owners enjoying a historically high settlement. In fact, DLF largely managed to avoid the expected negative consequences of the Covid-19 pandemic. After purchasing PGG Wrightson Seeds in 2019 – our largest ever acquisition – the Board passed a relatively modest strategy plan for 2020-24. Our focus is on profitable, organic growth and building our cash flow, to enable us to reduce bank debt and in November 2022 redeem our hybrid bond, which was issued as part of the financing package used to purchase PGG Wrightson Seeds. We delivered top-line growth in the previous year, and though the growth rate was not nearly as breathtaking as the prior year, we delivered a strong cash flow. DLF is currently in a better position financially than anticipated after purchasing PGG Wrightson Seeds. Bearing this in mind, the members of the Board and Executive Management have challenged each other about whether it is time to once again focus clearly on strategic growth. Because without ambition, DLF will stagnate. Work on our strategy plan has continued recently, and business acquisitions are back on the agenda. Areas have been identified that would strengthen our strategic foundation through acquisitions. When entering a market, acquiring existing companies is a very powerful tool for extending distribution networks, as is buying existing breeding programmes rather than starting from scratch. Still, planning growth through acquisitions is not easy. When a given opportunity presents itself, you must have the financing ready and be prepared to devote the time and management resources required by such a process; whether or not this is convenient. Pressure from the world at large to change agricultural farming and production to more sustainable methods is increasing. Climate goals and the green transition are driving many political initiatives. To a large extent, DLF’s portfolio suits these goals and contexts, including green protein, nitrogen binding and other areas, very well. However, it is also a journey in its own right. We need to continue investing in R&D to focus our already strong products on new demands and functionalities prompted by the green agenda, but we must also maintain investments in plant breeding and modern techniques to improve product characteristics and defend our market-leading positions.
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