During a challenging 2022, the Russia/Ukraine conflict drove commodity prices to record heights while also stretching supply chains. In 2023, markets started to normalise. Commodity prices fell, albeit while remaining relatively high. Volatility diminished. The pressure on supply chains and associated logistics also eased, allowing Nutreco to source key ingredients more predictably. 

Significant challenges remained, however. High rates of inflation resulted in low or negative margins for Nutreco’s customers. Skilled labour was still in short supply. And the recovery in demand was slower than expected across the industry as a whole.

Even so, the year did see a partial recovery in demand thanks to a variety of circumstances that differed across markets. In 2022, farmers had started reducing herd sizes in response to lower consumer demand. In 2023, turnaround in this trend was observed. Volumes in both Europe and North America remained limited, while growing in Asia. The overall market is still prone to a host of environmental factors such as disease, which continued to affect demand in 2023. African swine flu and avian flu were particularly pervasive. To sum up, 2023 represented yet another difficult year for the sector, with many of Nutreco’s competitors posting lower performances compared to 2022.

These market conditions provide strong justification for Nutreco’s strategy. This is focused on targeted growth across selected regions and product groups; strengthening the organisational structure; and actively managing margins, cash, and costs.

To drive future growth, Nutreco continued to make investments aimed at increasing and improving production capacity in growth markets, as well as supporting innovation. The Group also laid the foundations for expanded production with the construction of new plants in Mexico and Ecuador. In addition, a new plant was acquired in Germany to support growth in the young animal feed sector. The focus on Asia as a growth region remains unchanged: strategy is currently being defined to determine relevant future investment requirements.  

The company is also in the process of optimising its innovation pipeline to seamlessly connect sales, marketing, and R&D; shift the focus onto selected product groups; and ultimately increase returns. To reinforce its unique position in the market, Nutreco also successfully expanded its NutEx capabilities, with efforts primarily channelled into phytotechnology and biotechnology. NutEx aims to develop novel and proprietary ingredients to meet specific market requirements - and results to date look promising: the first products were launched in 2023, while several novel ingredients designed to upgrade key products will be introduced in 2024.

Building on the changes implemented in 2022, Nutreco continued to make progress on the reshaping of its organisational model. The objective is to increase agility and reduce costs by aligning roles and reducing complexity. The business also appointed a Chief Supply Chain Officer, who will take responsibility for aligning the supply chain with these goals. Sitting on the Management Board, the Chief Supply Chain Officer will focus on refining the company’s global footprint to deliver high-quality products safely, cost-effectively, and on time.

Over the course of the year, Nutreco took robust action to actively protect margins across all markets. Predominantly focused on product and species-specific margins, these efforts have made a positive impact on performance.

Safety inventories were successfully reduced by a targeted set of initiatives under the company’s Integrated Business Planning programme, boosting cash generation. Beyond supporting optimal inventories, this strategic programme also aims to increase the reliability of product planning and delivery to enhance the customer experience. As part of the Operational Excellence programme, meanwhile, the company identified operational improvements in the supply chain that helped to keep production costs under control. These programmes will both continue into 2024.

Looking ahead, macro-developments look set to support long-term growth in global animal nutrition and volumes are expected to continue their recovery in 2024. That said, the economic context remains uncertain. Nutreco will continue to take action to ensure cost competitiveness, increase agility, and prepare for renewed growth.

During the year an accounting irregularity was identified at Nutreco Ecuador. Adequate measures have been taken to prevent this from reoccurring. Please refer to the Care for Performance section for a more detailed clarification of the financial impact.