annual report 2012 - agrial · but the creation of new silos remains a priority ... 6 > agrial...

ANNUAL REPORT2012

CONTENTS

The Chairman’s and CEO’s report 2

AGRIAL IN 2012 4Key figures 2012 4

Agrial’s geographical presence 6

The Board of Directors 8

The Executive Committee 9

2012 highlights 10

OVERVIEW 14The rising cost of raw materials 14

Agrial’s growth in food-processing 19

Agrial supports sustainable development 24

AGRIAL’S BUSINESS ACTIVITIES 30Upstream Division 32

Seeds Division 39

Rural Distribution Division 40

Farm Machinery Division 41

Milk Division 42

Poultry & Meat Division 43

Beverages Division 44

Vegetables Division 45

2 > AGRIAL ANNUAL REPORT 2012

THE CHAIRMAN’SAND CEO’SREPORT

2012 was a particularly eventful year for the Agrial Group, a year which saw the acquisition of new businesses and territories. Following a 20% increase in 2011, turnover rose strongly again in 2012 by +33% to 3.6 billion euros. Net result is 45 million euros, the highest ever achieved.

Arnaud Degoulet Chairman

Proud of our cooperative valuesAs part of the International Year of Cooperatives, the 1st International Summit of Cooperatives attracted over 2,800 people to Québec in October 2012. It was an occasion to empha-sise the strengths and values of this business model, the world-wide importance of which few people appreciate: a million companies, 100 million employees and a billion members, an indisputable social and human force. In a deeply changing world where fi nance tends to take precedence over the economy, the cooperative model is increasingly seen as a credible alter-native for it enables democracy and market economy to exist side-by-side.

We are convinced of the virtues of this model which adapts to the needs of its members, but cooperatives are faced with new challenges: upstream or downstream increase in the scope of business activities, mergers, alliances, globa-lisation... not to mention the necessary changes in their governance.

Indeed, changes in Agrial’s governance have been at the centre of a major undertaking by the Board of Directors throughout 2012 and have resulted in the production of a charter of governance. These changes within the frame-work of our development are necessary in order to strengthen members’ representation on the various bodies of the Cooperative and to guarantee the decision-making and control powers of the Board of Directors. This charter respects the balance between representation of

the territories and representation of production units, one of Agrial’s strong points.

An agricultural context marked by the explosion in the price of raw materialsAlready noticeable in 2011, the increase in the price of agricultural raw materials continued in 2012, having different impacts on the income of members, according to what they were produ-cing. The prices of cereals and oil seed reached record prices and the recovery in the price of animal products has not always been suffi cient to compensate for the rise in the cost of feed.

Agrial has recorded good performances over the whole of the Upstream Division, in spite of business volumes in beef and pork being slight-ly down. The production of cereals and seeds, in spite of late harvesting due to the bad wea-ther, has increased; however, sales of cereals show a reduction because of strong export competition. Agricultural Supplies and Animal Feed are in line with our objectives. The same is true for the Rural Distribution Division whose business activity with farmers has improved. The Farm Machinery Division has profi ted from the steady market in agricultural equipment and has shown an appreciable increase in the sale of robots.

Substantial investments in the agribusiness divisions The planned merger with the Senoble Group announced in October 2011 was fi nalised in

AGRIAL ANNUAL REPORT 2012 > 3

March 2012 with the creation of the Senagral company, owned jointly by Agrial and Senoble. The enterprise specialises in the production of ultra-fresh dairy products. Following the increase to 65% in the capital of Délicelait, a manufac turer of dairy products for food-proces-sing industries, the creation of Senagral bears witness to Agrial’s position as a new player in dairy processing. The newly created Milk Division is proving its full worth, having realised this year a turnover better than 1 billion euros. Agrial can now play a role in the necessary restructuring of the French milk business, in par-ticular in the cooperative sector. As proof of this is the draft merger with the Eurial cooperative, announced at the start of 2013.

Agrial is also continuing its expansion into the Vegetables sector by taking over the French and Spanish businesses of Bakkavör, a player in the salads, fruits and ready-to-use vegetables markets. It has also reinforced its Meat business activities as a result of the acquisition of Charcu-terie Cosme and of the Maître Jacques company, a specialist in the processing of fresh meat. We should also mention the buyout of Manzana in the United States, a company involved in the production of apple compote, juice and vinegar. This is Agrial’s fi rst site outside Europe.

These external expansions in food-processing activities are all part of Agrial’s strategy, of which the primary objective is to give stability and profi tability to the Cooperative’s members. In the same way, members must be fully involved in its

decision making process and receive a profi t on their businesses.

Investment in agricultural activities has not been neglected. Two projects started in 2012 will come to fruition in 2013: in July, the new indus-trial tool devoted to fodder seeds, co-owned by Agrial and RAGT, and, at the end of the year, the new storage platform for products intended for self-service in our stores. The investment which was planned to take place in 2012 concerning the collections of cereals, has been delayed, but the creation of new silos remains a priority for 2013.

Increased results, maintained fi nancial ratios and a return of 6.7 million euros for members2012 was an exceptional year in terms of investments with an envelope of 223 million euros, of which a large part went to milk processing. These substantial projects, made possible because of the Group’s healthy fi nancial position, fall within the framework of a trend in profi tability which is increasing year on year. The accounts for the 2012 fi nancial year show a net result of 45 million euros, an increase of 18 % compared with the previous year. All divisions are showing results in line with our objectives, with the exception of the Poultry business which has taken the brunt of the increase in the cost of raw materials, costs which are diffi cult to pass on to clients.

At the Agrial region assemblies and the Annual General Meeting in May 2013, the Board of Directors will propose that 6.7 million euros be distributed to members, in the shape of payment of share capital and returns on business.

Once again, we can see the advantages of being a multi-specialist group, in the context of increasingly volatile markets. We would like to offer our thanks to all our members who place their confi dence in us, together with Agrial’s teams which, through their drive, are positioning the Group in the top 5 of French agricultural cooperatives.

Ludovic Spiers CEO

10,000 members

10,000 employees

+ 33%

3.61billioneurosThis was the Group’s turnover in 2012Increase in turnover (in million euros)

Increases in the turnover (in million euros)

Breakdown of turnover by division

Breakdown of headcounts by division

This was the increase in turnover in 2012

2010

2,261

2011

2,715

2012

3,608

Upstream 26%

Upstream 9%

Rural distribution 7%

Rural distribution 11%

Seeds 1%

Seeds 2%

Poultry & Meat 8%

Poultry & Meat 10%

Farm machinery 3%

Farm machinery 2%

Beverages 5%

Beverages 6%

Vegetables 20%

Vegetables 40%

Milk 30%

Milk 20%


KEY FIGURES 2012

Current income(in million euros)

Net result(in million euros)

Cash Flow(in million euros)

Investments(in million euros)

Shareholders’ equity(in million euros)

Debt(in million euros)

2010 2010 2010

2010 2010 2010

38.634.4

83.2

57

443

273

2011 2011 2011

2011 2011 2011

46.3

38.4 87.6

68.5

488

251

2012 2012 2012

2012 2012 2012

56.7

45.4

116.6

223.1 578444

“Maintaining our fi nancial equilibrium remains a priority, even after having invested 223 million euros to support the milk sectors, acquiring new industrial and logistics tools for our agricultural activities, extending our beverages activities and bringing added value to the Poultry & Meat division.The operational performance of the Group has enabled us to engage in this programme of investment by realising 135 million euros of gross operating profi t of which 30 million came from external growth. Improvement in productivity is a continuous process which contributes to this performance. Overall, the fi nancial situation has remained favourable, allowing us to have a larger debt level without weighing heavily on profi tability.The relevance of the investments and a good fi nancial structure are contributing to consolidating the future for the Group and its members.

Analysis by Philippe Galou Chief Financial Offi cer of the Agrial Group

Strong and controlled growth to bolster the future of the Group


“


les Hallesde la Drôme

Angers

Nantes

Le Mans

Tours

Caen Rouen

Laval

N O R M A N D I E

Agrial's head office

THE AGRIAL GROUP IN FRANCE AND THE WORLD

United States of America

Manche

Orne

Sarthe

Mayenne Indre-et-Loire

Ille-et-Vilaine

Calvados

SARTHE NORD

COTENTIN

BOCAGE ORNAIS

MONT SAINT-MICHEL

Valognes

Créances

CoutancesFalaise

Magny-en-Bessin

Ducey

Le Grand Lucé

Reignac-sur-Indre

BESSIN BOCAGE

PLAINE CAEN FALAISE

SARTHE SUD-OUEST

MAYENNE

PAYS D'AUGE

ORNE CENTRE ET EST

SARTHE SUD-EST

INDRE-ET-LOIRE

CAEN

St-Martin-de-la-Lieue

Ste-Foy-de-Montgommery

Briouze

Javené

Saint-Lô

VivoinErnée

Loué

Argentan

LE MANS

CENTRE MANCHE

ILLE-ET-VILAINE

Vegetables farming sector

Dairy farming sector

Cider fruits farming sector

Cattle farming sector

Eggs farming sectorPoultry farming sector

Pork pigs farming sector

Cereals and Seeds farming sector

Agrial region head office

Farming sector head office


THE COOPERATIVE’S TERRITORY

The Cooperative’s territory covers

7French departments

14 Agrial regions

located into four administrative regions:• Basse-Normandie,• Pays de la Loire,• Bretagne,• Centre.

It is organised into

Members of the Board

CHAIRMAN Arnaud Degoulet

1st VICE-CHAIRMAN Bernard Guillard

2nd VICE-CHAIRMAN Jean-Luc Duval

VICE-CHAIRMEN Pierre Hermenier Philippe Marie Rémi Pelhate

The other members of the Board of Directors

Jean-Pierre Bourban Pascal Carreau Jean-Luc Chéreau Joël Chevalier Sébastien Chevalier Éric Coignard Hubert de Beauregard Bertrand Detroussel Didier Duclos Jean Gautier Eric Guellaff

Pascal Jourdan Pascal Lebrun Frédéric Lecerf Catherine Leffray Éric Lemonnier Denis Mariette Jean-Philippe Osmond Bruno Paynel Gilbert Pilard Alain Ramaugé Jacques Renet

GUESTAnthony AmeslantChairman of the Young Farmers commission

TREASURERPhilippe Connefroy

SECRETARYHenri Hédouin

THE BOARD MEMBERSRémi BézardSonia Boudet-GuthRichard BoyerAndré GorjuPhilippe PotierXavier Trincot


THE BOARD OF DIRECTORS


THE EXECUTIVE COMMITTEE

Ludovic SpiersChief Executive Offi cer

Patrick BunelGroup Human Resources Director

Christian ClarysseManaging Director – Upstream, Rural Distribution and Seeds Divisions

Didier Secoué Managing Director – Farm Machinery Division

Philippe GalouGroup Chief Financial Offi cer

Michel MarietteGroup Institutional Relations Director

Franck MalinowskiMananging Director – Beverages Division

Louis-Marie Le CoutourManaging Director – Vegetables Division

Patrick LepelleuxManaging Director – Milk Division

Francis BoujuManaging Director – Poultry & Meat Division

4

4

AGRICULTURALDIVISIONS

FOOD-PROCESSINGDIVISIONS

Upstream

Vegetables

Seeds

Beverages

Rural distribution

Milk

Farm machinery

Poultry & Meat

• Agricultural supplies• Animal feed• Cereals • Eggs• Cattle • Pigs• AgrialServices

Multiplication of seeds:• Straw cereals• Maize• Fodder

Production and marketing of beverages and apple-based products

Production and packing of fresh vegetables

• Agricultural and retail distribution of gardening products

• DIY• Agricultural inputs

Distribution of agricultural and specialist rearing equipment

• Production, processing and trading of poultry

• Processing of meat

Dairy collection and processing of ultra-fresh products and ingredients for the food-processing industry

2012 HIGHLIGHTS

Beef farmersThe council for the Beef Farmer Organisation has decided to set up a plan for renewing meat handling plants. To sup-port this, the Cooperative will provide help for the creation of

Arnaud Degoulet took over the chairman-ship of Agrial from Gilbert Herpe in July 2012.

Changes in governanceIn order to refl ect developments within the company, Agrial has considered its governance in depth to clarify and increase members’ representation within the Cooperative’s bodies. In January 2013, a fi rst meeting of representatives was arranged to discuss the basics of this work.


The life of members

The governance of the Group

5,000fattening units

2012, the Internation Year of CooperativesAgrial attended the fi rst Inter-national Summit of Coope-ra tives which took place in October in Québec, as a member of the Coop de France delegation.

billionmembers of cooperatives throughout the world1

Milk producersWith the creation of Agrial’s Milk Division, an increase in the share capital of the producers was proposed. The subscription would increase from 2% to 7% over 5 years.

7%

2%

Transport managementThe Upstream Division launched its Transagrial project and implemented a TMS (Transport Management System).

Rural Distribution and Agricultural SuppliesThe construction of Agrial’s new logistics platform in Sarceaux, in the Orne region will allow for the creation of 30,000 m² of covered storage and 15,000 m² outdoor storage between now and 2014.

Farm MachineryThe V3PRO subsidiary has been created.It is dedicated to the distribution of the JCB equipments and offers a specialised After-sales service.

Seeds

Apple producersA participative contract has been set up with members who produce apples for processing.

1,500 stockbreeders in Teillé (Sarthe)The fourth edition of the Stockbreeder Days held in June attracted about 1,500 members to Teillé in the Sarthe region. These meetings, which have become unmissable events, are an opportunity to learn and exchange ideas on the state-of-the-art techniques for animal and plant production.


The Cooperative’s developments

Logged thanks to the optimisation of the transport logistics of the Milk Division

30,000 m2

of covered storage

12 million euros

have been invested in the construction of a fodder seed production site in Maresché (Sarthe) in partnership with RAGT.

-2%km

Milk• The merger between Agrial and the Senoble group, was finalised with the creation of a company named Senagral, the leader in ultra-fresh dairy products in DBM nationally (TO = 500 million, 1,450 employees).

• Agrial has increased its capital share in Déli-celait (65%). The company specialises in the manufacture of dairy ingredients for agribu-siness industrials and catering and confectio-nery professionals.


Growth in the food-processing industryPoultry & Meat• Agrial has moved closer to Charcuterie Cosme and holds 34% of the company based in the Sarthe region (TO = 20 million, 115 employees).

Beverages• Agrial has established a presence in the United States by buying up Manzana (TO = USD27 million, 50 employees), a Californian company specialising in the production of organic apple-based compotes, juice and vinegar.

Vegetables• Florette has announced its intention to take over the French and Spanish businesses of Bakkavör, a producer of salads, fruits and ready-to-use vegetables and dressed products selling in Large-and-Medium-Sized retailers and catering (4 factories, TO = 130 million, 1,150 employees).

• Agrial has invested in Maître Jacques, a company from the Bretagne region making meat-based products marketed in large distribution outlets (TO = 40 million, 130 emplo yees).

Lessay

Milagro

Noblejas

V de Canarias

Iniesta

St-Pol-de-Léon

Cambrai

Mâcon

Torreilles

Torre-Pacheco

L'Isle-sur-la-Sorgue

• The Vegetables Division has acquired the transport company Lubac in the Bourgogne re-gion (TO = 16 million, 76 trucks).

Farm Machinery• Agrial’s Machinery Division launched the new high-effi ciency GEA Multibox robotic milking system.


Innovations and product launches

Promotional campaignsand productsFresh raw vegetables:• To celebrate its 15th birthday, Priméale aired its new strap line “When pleasure is at a premium, it must be Priméale”. with a view to underlining its vision of vegetable pleasure: a pleasure for the senses, a pleasure to cook, to taste and to share.

Beverages• Ecusson has continued to promote its Rosé cider as an aperitif in women’s maga-zines. • Loïc Raison has carried out its 1st national poster campaign to advertise its cider now avai-lable in France in 33cl. bottles.

Beverages• Loïc Raison and Ecusson ciders are now available in small 33cl. and 27.5cl. bottles which are handier and more modern.

Ready-to-use vegetables• Florette has aired two new advertising fi lms: “Florette, fresh and imaginative salads” in France and “Bags of Feel Good” in the United Kingdom. These two adverts give the brand an air of fun and modernity.

• Danao, the answer to a gourmand breakfast, has launched Danao Multi-vitamin, a unique recipe named the best new product in fresh juices in 2012 and “taste of the year 2013”.

5 boxes

1singlerobot

• Créaline has promoted its soups and purées with three TV adverts highlighting the products’ taste and freshness.


Increases and volatility in the costs of agricultural raw materials: a continuing trend

The rising cost of raw materials

OVERVIEW

The volatility in the cost of agricultural produce started on a world-wide scale towards the end of 2006 and all the experts agree that it will constitute a structural element in future years. Following a price explosion in 2007, then an equally brutal slump in 2009, the costs

of agricultural raw materials increased sharply in winter 2011 and then started to rise again from summer 2012. The current, very tense situation on the agricultural raw materials markets is the result of structural factors to which were added, in 2012, cyclical elements, and, notably, climatic conditions.

A growing demand for raw materials

The world-wide population evolution and an increasing demand for a higher standard of living in the emerging countries are contributing to the growth in demand. In these countries, traditional food habits are changing to become more like “western” food consumption, with a growing taste for dairy and meat products. The spread of urbanised areas, often to the detriment of the most productive agricultural land (it is estimated that France is losing agricultural land equal to the surface area of one of its administrative department every 10 years), and the programmes for the development of bio fuel (40% of American maize is used to produce bio ethanol) are contributing to the reduction of available resources, especially for food production. As for speculation in the agricultural commodities markets, its importance is controversial but its influence on price volatility is not neutral.

Climatic problems are causing tension in the markets

An historic drought in the United States, with an unprecedented heat wave causing the loss of almost 100 million tonnes of maize, and also climatic anomalies in the countries around the Black Sea, sparked off the rise in cereal and oil seed prices in the summer of 2012.


June2012

July2012

+ 60Per tonne of wheat

+ 2%This is the annual increase in agricultural demand for raw materials as estimated by the FAO.


Soaring prices In 2012, wheat prices surged in June and July (+ 60/t).The price of soya meal doubled between January and August 2012 to reach 560/t and rape cake rose to 310/t over the course of the summer, a price higher than that of soya meal six months earlier.

Increasing production costs

Stock breeders who are very dependent on maize, wheat and soya to feed their animals have suffered from the increase of the prices of raw materials from the second half of 2012. However, Agrial’s factories had planned for this and were able to delay the date of these rises for our farmers.

The price of soya meal has doubled

Increases in the cost of feedComparison 2011-2012

OVERVIEW > The rising cost of raw materials

+ 25% Simple feed

+ 21% Compound feed stuffs

+ 24% Pig compound feed stuffs

+ 25% Adult bovine animals compound feed stuff

+ 20% Poultry compound feed stuff

Source: Ipampa, index of average prices of agricultural production

Source: La Dépêche/Le Petit Meunier

2005

0

100

200

300

400

500

600 Euros/tonne

2006 2007 2008 2009 2010 2011 2012July

Soya meal

Feed wheat


According to data supplied by the economic observatory of Agrial members, the cost of feed per thousand litres of milk rose to 126in December 2011 against 110 in 2011, i.e. an increase of 16 per 1,000 litres

+ 16eurosper thousand litresof milk produced

The organisation of Agrial pig producers estimates the average increase of a tonne of feed to be

46. This represents an increase of 13 per large white pig.

+ 13eurosper pig

The average increase in the cost of feed as measured by Agrial’s Poultry groups of farmers for 2012 is of 28% in standard and label chickens.

+ 28%per standardchicken

The increase over one year in feed costs for the fattening phase of a young Charolais animal is about 14 centimes per kilo of carcass (420kg of carcass weight from a 300kg live weight grazing calves at the end of December 2012).

+ 14euro centimesper kilo of Charolais young bull carcasses

Over the whole year, the average price of a tonne of feed for laying hens increased by 6%. The impact on the cost price is 3.8%, i.e. 28 centimes per 100 eggs.

+ 28centimesper 100 eggs

Impact of the costs of feed on production


OVERVIEW > The rising cost of raw materials

Weakened sectors

The rise in the price of raw materials has hit hard all animal sectors but to varying degrees according to types of animals and sectors. The cattle and pig breeders have been the benefi ciaries of an improvement in the economic situation with the ave-rage sale price of these types having increased respectively by 14.5% for adult bovines and by 11% for pigs between 2011 and 2012. But in many cases, these increases have not been enough, in particular in the sectors where producers have been obliged to follow new standards (for example the “animal welfare” standards for pigs and laying birds). In addition, the processing link is not capable of passing on, in the short term, these increases downstream of the sectors. So, the results of slaugh-tering units have been very adversely affected in 2012, in particular in the Poultry and the Pigs sectors where the impact of the price of feed is the highest.Although the situation brings with it some uncertainty about the future of some product lines, our regions possess a major advantage for the future and competitiveness of animal production, because of their soil and climate conditions (fertile land, favou-rable rainfall etc.) and their proces-sing tools.

Faced with this situation, Agrial has put in place various facilities to help its members to optimise and sustain their production levels: technical-economic follow-up, analysis of production costs, purchase offers of feed, fi nancial assistance etc. Among the feed purchase offers of feed proposed, the following should be men-tioned:

• term purchase offers for full feed and raw materials which fi x supply costs, • the subcontracted processing offer which is in the form of a “cereal ex-change”: the cereals produced by a

farm are processed into feed via Agrial factories for later use by the pig unit of

this farm.

In the beef sector where farmers face the question of the economics of fattening as opposed to selling, the business made available fi nancial measures to sup-port the rearing of grazing calves.With the aim of ensuring the future of volumes and the supply of slaughtering tools, it has also decided to set up a plan to renew slaughtering facilities with fi nancial aid to provide 5,000 fattening units.

Agrial supports its members

In 2012the subcontracted processing offer achieved savings of 40 euros in the average feed cost per sow.

A strategic development in food-processing activities to the benefi t of members.

Agrial’s growth in Food-processing

OVERVIEW



OVERVIEW > Agrial’s momentum in food-processing

Agrial has become one of the top 5 French agricultural cooperatives as a result of its signifi cant expansion in the food-processing sector. But this expansion can be accepted only if it enables the Cooperative’s members to access stable and cost-effective rights to produce.

As a means to pursue this strategy of growth, Agrial is gradually constructing a multi-specialist food-processing group on an international scale.

The Group is basing this on expected shifts in the international agricul-tural situation:• capture downstream markets to give members rights to produce; • reach the critical mass required to increase its market shares and

allow for industrial and commercial optimisation;• innovate to create value;• become more international to share the risks and to have a presence

in developing countries.

Capturing markets to give members rights to produce

Generating outlets for milk producers

This is the approach taken by Agrial’s Milk Division which has been greatly reinforced since its creation two years ago, by substantial deve-lopments in milk processing.

Délicelait: After taking a minority interest in 2011, Agrial became the majority shareholder in 2012, of this company specialising in specifi c milk-based ingredients for the agrifood industry. In 2012, it processed 140 million litres of milk, of which 100 came from Agrial, an input which is set to increase in 2013.

million litres of milk

are processed in Délicelait’s factory

in the Manche department.

“The success of an enterprise depends on the values of the men and women who are part of it, contribute to it and share a common desire to thrive, a sentiment we pass on to our clients. Délicelait and Agrial share these values needed to succeed”.

Alain Marie, CEO of Délicelait

140


430million litres of milkare processed in Senagral’s four factories in France.

Senagral: Agrial created this company in March 2012, jointly with the Senoble group. It specialises in the manufacture of ultra-fresh dairy products sold as distributors’ brands: fromages frais, yoghurts, crèmes fraîches and milk desserts.

By strengthening its downstream outlets, Agrial is getting ready for the end of milk quotas in 2015 by making available to its members well developed extra rights to produce. It is also an opportunity to position itself as a major player in milk processing in France and to play a role in the necessary restructuring of the French ultra-fresh market.

60 %Of pigsprocessed by Cosme come from Agrial’s pig producers

“We work in the spirit of partnership. The pigs come from partners’ production units close to our factory and conform to Cosme’s specifi cations”.

Joël Cosme,Founder and CEO of Charcuterie Cosme

Generating outlets for farmers

Agrial, already present in the slaughtering and processing of poultry, is expanding its activity to include meat processing, following the acqui-sition of two food-processing SMBs within the Cooperative’s territory. The products manufactured by these two new Agrial subsidiaries are sourced by three main products of its farmers: pork, beef and poultry.

Maître Jacques is a company specialising in meat-based products for self-service meat departments and for butchery sections in large retailers: the “special occasion butcher” promotes excellence of taste

Charcuterie Cosme specialises in the manufacture of traditional products, notably its authentic, award-winning Le Mans rillettes. It has worked for a long time with Agrial’s pork producers’ organisation, in quality sectors.


Innovate to create value

The Beverages Division, faced with a slow and regular reduction in consumption of cider in France, has developed a strategy to win back the consumer. As the leader in the French cider market, Agrial has re-vamped its offer in order to revitalise a nationally mature market. Product innovation and new modes of consumption were the two major thrusts developed in 2012, accompanied by several communication campaigns aimed at consumers. Ecusson Rosé cider has shown strong growth in sales while the small, modern packaging formats of Ecusson and Loïc Raison brands have been favourably received in supermarkets and has targeted bars and caterings.

In addition, Danao, the Group’s fl agship brand in fresh fruit juices, has won over consumers who thought that it was the best innovation in the fresh fruit range in 2012 and it was awarded “taste of 2013”.

Expand into new markets and facilitate industrial and commercial optimisation

The proposed acquisition by Agrial of Bakkavör’s French and Spanish business activities via its Florette subsidiary, aims to join two of the four major players in the fresh ready-to-use vegetable market. This union will allow Florette to expand into new market opportunities, in particular the food service industry and into new products such as snacking. In addition, economies of scale will enable costs to be reduced, mainly in matters of purchasing and logistics.

175,000tonnes

of apples are processed

on average each year by Agrial.

OVERVIEW > Agrial’s momentum in food-processing

With Bakkavör, Florette’s

French volume will be

doubled


Become international to enlarge its market, share risks and have a presence in developing countries

Taking into account the size of its market share in France of cider and apple juice, the ex-pansion of Agrial’s cider sec-tor leads logically to its looking for external growth abroad. This is the reason behind the acquisition, in March 2012, of the Manzana company in the United States. The enterprise specialises in the processing of apples into compotes, juice and vinegar.By this means, Agrial has gai-ned a foothold in the large American market with a com-pany which has the same basic business and with which commercial synergies should be evident in time for the expansion in sales of French product ranges in the United States.

To strengthen and expand into new markets is also the idea behind the planned merger of Agrial’s Milk Division and Eurial, announced at the start of 2013. This project between two cooperative groups whose milk treatment businesses are complementary, will enable us to form the second largest French milk cooperative. A position, however, which leaves us still trailing a long way behind the leading European milk processors.

2Agrial and Eurial willcollect jointly almost

billion litres of milkfrom their members.

5 timesThe American market has

more consumersthan the French market

All the Group’s food-processing areas if they fi t in well with the interests of all its members in the long term, are dictated by the economy and by maintaining a good balance between all the Group’s business interests. Not forgetting, of course, to meet the expectations of its clients and consumers without whom these developments would not be possible.

A commitment, sustainability for the company and its members

The Agrial Cooperative has been committed to a policy of sustainability since 2005. The divisions and activities of the Group have also carried out numerous actions from the economic, environmental and social points of view. The common objective of these initiatives is to contribute to the strength of the Group and to respond to the wishes of ordinary people, consumers and its own employees.

Agrial supports sustainable development

OVERVIEW



The growth in world population and economic expansion are generating ever greater food requirements. At the same time, conserving our environment is crucial. The missions identifi ed within the Agrial Group’s corporate plan fi t in with this logic:

• to meet and anticipate the needs of consumers and clients in the fi elds of services and agricultural and food products;• to create value in order to contribute to the success of the Cooperative’s members, especially by securing rights to produce;• to respond to the society’s expectations by developing the territory. Among the values it has, the Group is based on the development of human potential and the logical exploitation of agronomic and climatic potentials while respecting, or even restoring, natural balances.

Territorial involvement

Agrial’s vision for 2020 is based on the construction of an effi cient food-processing group. Its key contribution to economic development and its capacity to link farmers, consumers and the people within its territory are the basis of a reference agricultural cooperative in Western France.

• Under its new name of La MAISON Point Vert, expansion of the network of stores is helping to maintain economic activity in rural areas by offering a wider local service. It employs over 1,000 people within the Cooperative’s territory.

• Its local presence also appears to be essential for the Beverages Division. The quality attached to the Normandy and Brittany regions gives it a duty to be involved on a local basis. This is translated by its involvement in activities such as Breton festivals, festnoz and cultural events.

Sustainable development, one component of Agrial’s corporate vision

1,000Employeeswithin the Cooperative’s territory

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Cultivating the confi dence and determination to succeed together

OVERVIEW > Agrial supports sustainable development

• Faced with environmental and regulatory challenges, the Cooperative has initiated an ambitious training programme for its operational technicians and sales advisers. The objective is that all employees dealing with phytosanitary products should have gained Certiphyto certifi cation within the next two years.

• Provide managers training on team boosting: this was the objective of the training course for 250 employees of the Cooperative which fi nished at the end of 2012. Changes in managerial practices were highlighted, emphasising the link between the various players in the company

• The Secoué abattoir of the Poultry & Meat Division launched the CAPPE project (“Build and Improve Constantly Everywhere and Together”) in July 2012. By the end of the year, the results were clear: improved working and safety conditions, increased production and more effi ciency in the chicken cutting/packaging unit. The approach will be extended to all units in 2013.

• To maintain and reinforce the spirit of enterprise on the part of its employees, Créaline, a subsidiary of the Vegetables Division has drawn up a programme of concrete actions. The setting up of “the work of other sectors” encourages exchanges between factory employees and administrative staff. The “versatility” matrix is integrated into the management of human resources. Innovation is reinforced by numerous partnerships with technical schools and universities in the West of France. Finally, parity between men-women is reaching perfect equilibrium and, within management, there are even 6 women for 8 staff.

• Agrial is a partner of AFDI (Agriculteurs Français et Développement International), an association founded by agricultural organizations to support rural development in various countries over the world. Agrial especially supports AFDI’s actions taken in the Balkans. In November 2012, it hosted a delegation of technicians coming from Kosovo.

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100%

5%

recyclable

savings

Plastic bottle

by changing from heating oil to gas achieved by the Coutances feed factory

Contributing to respect for the environment>

• On the energy front, Soléco-Florette factories and the cattle feed factories have increased their energy savings by optimising processes and so have reduced their consumptions.Changes to power supplies are also a profi table vector: the feed factory in Coutances has changed over from heavy oil to gas. With a better return, the mixed fuel boiler, now powered 100% by natural gas will enable savings of about 5%, including recycled materials. The next step: the factory in Fougères in 2013.

• Créaline produces purées and fresh soups. The traditional glass bottle has been replaced by a plastic bottle which is 100% PET recyclable. As a consequence, there are less noise, reduced weight for employees and trucks and a reduction in fi lm used in secondary packaging. Consumers have been happy with the change: sales have increased by 70%.


• Following on in this vein with regard to reducing greenhouse gasses, the Agrial Group has participated in producing the ADEME guide which is aimed specifi cally at agricultural holdings and food-processing companies which want to reduce their carbon emissions. Full of practical advice, this guide is based on concrete examples of actions revealed from a great deal of feedback. The technical guidelines have been drawn up by including economic factors and evaluating their environmental impact (water, biodiversity etc.).

• The transport subsidiary of Priméale-AJYR, Inter-Légumes, applied technical improvements and regulations to make its vehicles more environmentally friendly. The decision was taken to change 40 tractor units and to train drivers to drive in a fuel-effi cient way. The resulting savings are expected to be in the region of 5%. The company was praised by the ADEME for this “CO2 objective” approach.

• With this same aim in mind, SM3 and Elevance have optimised their logistics and After Sales Service to provide a better service for their clients and to reduce fuel consumption. The renewal, already started, of its fl eet of vehicles has resulted in a gain of 3 litres per 100 kilometres!

• SM3, for the fi rst time, has organised the collection and recycling of agricultural polypropylene twine. In partnership with its supplier, SM3 is offering its clients the choice of collecting their used twine to recycle it. In return, they can buy CyclaFil twine at a reduced price.

-3 litresper 100km

“We want to support our sectors in the progressive and exemplary development of agricultural practices which are environmentally friendly.Together with the cooperatives and farmers, we are researching the best practices in order to reduce the environmental effects associated with beef production.”Delphine Smagghe, SVP Sustainable Development and External Relations, McDonald’s France.

Estelle Petit,Quality Director, McKey

• For several years, the beef sector has been strengthe-ning its partnership with McDonald’s and its supplier McKey. The agro-ecological strategy developed is based on a network of farmers who test out new practices. Eva-luated with indicators, the most effi cient of these prac-tices will be offered to the largest number of farmers. The ready-to-use Vegetables Division has not been outdone with its Spanish subsidiary Florette Agricola, being approved in 2012 by McDonald’s as one of its European Flagship Farms. “To have been chosen by McDonald’s as part of this European programme is an important recognition of the

efforts made by the company in the fi eld of sustainable

development and our policy of continuous progress towards excellence.”Jose Maria Garrido, Florette Spain


OVERVIEW > Agrial supports sustainable development

Strengthening economic effi ciency for sustainable growthThe Agrial Group is continuing to expand in a diffi cult economic time. This profi table growth enables us to support a food-proces-sing plan to create added value and sustainable outlets for mem-bers. It boosts agricultural production in our territories.

2012 was an important year for the Agrial Group in the matter of investments. Never have so many projects been realised or initiated. They are part of a long term sustainable economic per-formance.

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• The Florette group is committed to the CSR initiative (Corporate and Social Responsibility) and has formulated four major themes:

1. To promote sustainable agricultural practices with its salad and vegetables producers.To actively support the vegetable production sector and ensure that raw materials come from units which demonstrate they are using a system of sustainable agriculture.

2. To prepare and deliver salad leaves and ready-to-use vegetables produced using an environmentally responsible approach. This means signifi cantly reducing the direct impact of its activities on the environment (for example: zero landfi ll). In the fi eld of packaging, to study and evaluate the benefi ts of an Eco Design Products & Packaging project. Continuous improvement in food security in the production of salads and ready-to-use vegetables still remains a priority.

3. To encourage Florette’s employees on a daily basis. To lead the project on a long term basis and obtain the agreement of all Florette’s employees, a relevant governance system will be set up. All employees will receive training on sustainable development and on the way each individual can contribute to reaching its goals.

4. To put in place “Feel Good” programmes for Florette employees and local communities. By setting up a Job and Competency Planning programme for employees, the objective identifi ed consists of making Florette an employer of choice which enhances each person’s career evolution. At the same time the “Feel Good” programme will be rolled out within the company and local communities.

Promoting a technical-economic approachAgainst deeply unstable economic conditions, the technical-economic approach is a central tenet, a priority on the ground with members. An analysis of data collected from our partners confi rms the disparate nature of the results and the relevance of the approach. Price volatility is a new challenge for the management of farms. To support them, the technical-economics consultants have been based on the theme of “how to talk economics with your member”.


Promoting sustainable and cost-effective agricultureThe Ecologically Intensive Agriculture (EIA) approach is included in the Agrial Cooperative’s company plan. Its ambitious objective is to improve technical and economic effi ciency to produce more and better while taking full account of the environmental factor. Farmers are conscious of the environmental and societal challenges which have to be met in current agricultural production. So they are demanding effi cient and proven alternative solutions. The choices identifi ed by the EIA are to base agriculture on a better understanding of the living world and to use the latest technology available. The approach applies to agronomy and plants but also to animal production.

• Optimisation and preservation of the soil

• Nutrition and protection of plants

• Animal health and nutrition

• Conversion of biomass

• Water management

• Equipment and agricultural machinery

• Rearing sheds

• Biodiversity

To reach these objectives, three key factors for success appear essential:• economic enhancement of production;• extending the process of innovation; • developing training.

As an extension of the “global approach” training validated by the technical-economic consultants, the operational implementation of the EIA approach rests on the inventory of actions already in progress and the emergence of research needs, the dynamic of a network of innovating units and the training of members and technicians. As examples, we could mention the Dephy ecophyto network for fi eld crops or leguminous production, the Aquafl ore programme, the development of DSTs (decision support tools) and alternative solutions, or the reduction of the use of hormone treatment in landless farming such as that employed in pig production. For the Upstream Milk division, the “Responsible Milk” approach engaged with the Compagnie Laitière Européenne (CLE) rests on the same fundamentals with audits, pilot farms and trai-ning for members. With Unilever, the contract is part of the world-wide programme for sus-tainable commitments by producers based on values such as bio diversity.

With a transversal and collaborative organisa-tion, the appropriation of the approach for more sustainable agriculture is found within Agrial, in order to anticipate changes, differentiate itself and respond to the expectations of farmers and consumer.

8 areas identifi ed

The EIA chair of enterprises

To assist its members, the Cooperative has decided to endow an enterprises chair, created with fi ve other partners.

Led by three cooperatives—Agrial, Terrena and Triskalia—this chair is devoted to creating training programmes and developing research programmes in the fi eld of Ecologically Intense Agriculture. They will be delivered in three French colleges of advanced education: Agrocampus Ouest in Rennes, ESA in Angers and Oniris in Nantes. The training will be aimed at technicians from the cooperatives but also at farmers who are members.


Agrial’s business activities


Upstream Division

> Agricultural Supplies 32

> Animal Feed 33

> Cereals 34

> Cattle 35

> Pigs 36

> Eggs 37

> Services 38

Seeds Division 39

Rural Distribution Division 40

Farm Machinery Division 41

Milk Division 42

Poultry & Meat Division 43

Beverages Division 44

Vegetables Division 45


UPSTREAM DIVISION > AGRICULTURAL SUPPLIES

Unstable weather conditions

Although the economic situation in agriculture in 2012 was quite favourable, the unstable weather conditions caused problems for agricultural production. Following a water shortage over the 1st quarter of the year, periods of rain followed one after the other, especially in autumn: rainfall three times more than normal was recorded in October at the Le Mans station in the Sarthe region.The turnover for Agricultural Supplies rose to 202 million euros in 2012, an increase of 5% compared with 2011.

Firm prices for fertiliserFollowing the large price increases in 2011 (+30%), the price of fertiliser increased at a lower rate in 2012 (+4%) but remains at a high level. The change in the areas under cultivation for cereals and oil seed rape, the low nitrogen-credits measured at the end of winter and the prices of cereals favoured purchases by our members. In this context, we followed the market with an increase in volume of fertilisers of 3%. On the other hand, in spite of a promi-sing market and stable prices, the volume of conditioners is showing a signifi cant reduction (-15%) compared with 2011 since bad weather conditions have caused spraying to be erratic this year.

Maximum disease induced pressureWeather conditions have favoured the development of diseases, especially on cereal crops. The action levels recommended by the Bulletins de Santé du Végétal were reached rapidly and applications had to be re-applied to reach a suffi cient level. Because of this, the turnover in fungicides showed an increase of 16% and that of the “crop protection family” increased by 2.5% in line with the improvement in our market shares, especially in the South of our territory. Of note also was an increase in turnover on treatments for vegetable crops (+13%). The use of decision support tools (DST) continues to expand with more than 9,000 ha under contract for Atlas and 40,000 ha identifi ed for the Aquafl ore approach. As a reminder, our objective is to qualify 80% of our members’ plots between now and 2015 with Aquafl ore.

A good seed campaignThe volume of seeds sold has increased by 6%. All varieties have been a part of this rise except for protein crop seeds where sowing has been on the decrease for 2 years; the improvement in the cereals market entailed a simplifi cation of rotation. In cereals, several factors have favoured sales of certifi ed seeds: an increase in land under cultivation, quality problems at harvest (damp, levels of germination etc.), the attraction of genetic progress shown by better

resistance to disease, a dynamic commercial offer. The tonnages sold have increased by 11% in spite of the returns made by our members because of the diffi culties encountered at sowing (8% of sales). In maize, the GRAL approach, whose originality rests on the appreciation of nutritional criteria by measurements on fi stulated cows, played its part in the increase in a sluggish or even decli-ning market.

The highlights of 2012• The guiding principle of the business remains the support given to members in developing their produc-tion units. To meet this objective, adapting the skills of advisers to the technical-economic approach, to the regulatory framework and, in a more general way, to the current and future expectations of members, continues. 41 technical-economic consultants gained their Profes-sional Qualifi cation Certifi cate as technical advisers to members of the Cooperative. At the same time, following the reform of the phytosanitary distributor accreditation, a far-reaching training plan has started; 450 employees are involved.• The actions aiming to “produce more and better” are continuing. The fi rst approaches were outlined at the “Ecophyto 2018 all involved” symposium last September held in Caen.• Building work has started on the logistics platform site in Sarceaux (Orne). It will be operational in September 2013 and will be devoted in the beginning to supplying our stores, and to agricultural supplies between now and 2014.Maintaining proximity and developing exchanges remain essential links in our strategy. 3,000 members have taken part in the events offered by Agrial culminating in the Stockbreeders Days which took place in Teillé in the Sarthe region.

Conditioners9,700

Phytosanitary52,100

Film-Twine-Various7,200

Fertilisers88,600

Seeds44,600

Breakdown of 2012 turnover (in thousand euros)


UPSTREAM DIVISION > ANIMAL FEED

Volumes driven by cattle feed

In spite of the increase observed in cattle, tonnages in feed levels dwindled in 2012 at the national level under the infl uence of landless production (pigs and poultry). Production was faced with the surge in the price of raw materials in the second half of the year.Agrial closed the fi nancial year with an almost 4% rise taking into account the increase in its scope following the merger with the Elle&Vire cooperative.

Agrial, the leader in cattle feedThe 4% increase in business activity is the result of strong expansion in the manufacture of cattle feed (+10.7%) which resulted from the good sales performance within the Cooperative and the arrival of the Elle&Vire members following the merger. Sales of minerals for cattle rearing are rising (+8%) especially with a la carte minerals which enable formulae to be optimised.The volume sales of poultry for fl esh and, in particular, those destined for label production (+1.2%), also played a part in the increase.On the other hand, following the closure of integrated com-panies, the volumes of pig feed manufactured are showing a reduction (-5.9%). The reduction in feed for laying hens (-6.5%) is a result of the application of animal welfare standards to conventional production which has had an adverse effect on the business of the rearing houses.Volume of equine feed presented a good performance with sales being led by compound feedstuff (+3.5%). The upturn in sub-contracted rabbit feed has also helped to produce the positive result.Once again, the prices of raw materials surged in the second half of the year. The purchasing policy has enabled us to neutralise about 40% of these increases at the sale point.

Actions carried out in 2012On the ground, supporting members has remained the central pivot of our strategy. This is shown by the increasing number of farmers taking part in the Lactoplan and Écolait groups.To support and encourage specialisation in production units, the fi eld teams have been reinforced by key tech-nical-economic consultants specialising in cattle rearing. In addition, a study of the expectations of large fl ocks in animal feed terms has been put in place with the creation of a pilot group.

In 2012, Agrial obtained the renewal of its accreditation to dispense veterinary products. This renewal is the result of a change in organisation which related to the administrative management of the traceability of products and on the method of delivery, with a stop on deliveries via the stores.Following the plan launched in 2011 by the Ministry of Agriculture aimed at reducing the risks of antibiotic resis-tance in veterinary medicine, the animal health service has undertaken to ensure that the prescription process will be in conformity and has proceeded to a review of pro-cedures. At the same time, actions have been carried out in rearing to reduce the use of medicative feedstuff.The work started in 2011 on the performance and quality of our industrial tools is bearing fruit. The number of claims by clients has fallen (-20%) giving a ratio of 0.4 claims per 100 deliveries. This emphasis on quality improvement remains a priority for 2013.

Main InvestmentsWork on two major projects continued in 2012:• Continuation of the work already started at the Ferté-Macé (Orne) site: refurbishment and automation of the factory process and integration of a cleaning procedure for cereals received.• Deployment of new software for managing purchases and supplies. This concerns a major administrative redesign of the procedures which accompanied a re organisation of functions within the purchasing/supply team.

Horsefeed 12,200

Poultry feed117,600

Cattle feed268,800

Pigfeed

127,000

Simplefeed

64,600

Breakdown of 2012 sales of feed to members (in tonnes)


UPSTREAM DIVISION > CEREALS

Collections increasedand prices raised

Collections carried out by Agrial in the 2012 calendar year increased by 11% to 1,484,000 tonnes. Over the fi rst six calendar months, produce collected from farmers’ storage rose by 36% to 134,170 tonnes.

The collection of the 2012 harvest up to 31st December shows an increase of 9% with 1,350,000 tonnes compared with 1,235,000 from 1st July to 31st December 2011.The damp conditions prevailing in the spring greatly favou-red yields from shallow farmland, whereas in deep ground, yields were lower than in 2011. The collection of wheat rose by 9% and that of barley by 30%, but the quality was poor as a result of diffi cult harvesting conditions:re-germination on the earliest plots, average specifi c weight down by over one point.For oilseed rape, the climatic conditions over the year and the increase in the share of hybrid varieties in crop rota-tion, produced more consistent yields and the collection increased by 12%.As for sunfl owers, the diffi culties in harvesting depressed the collection which fell back by over 30%.Finally, in maize, in spite of the long delay, returns were at a good level, so as the transfer of silage to grain. This resulted in a good collection level, equal in tonnage to that of last year.

Sale prices historically highFollowing the fi rst six months of 2012 when the price of wheat in the long term was bordering on 200/tonne, prices took off in June-July (+ 60/tonne). The market then stabilised until the end of the year at around 260 moving within a range of +/- 10/tonnes). For oil seed rape, prices reached a historic peak at over 500/tonne before falling back at the end of the year to 470/tonne.In this context, a large number of Agrial’s members chose to fi x the selling price of their production by taking up the Cooperative’s fi xed price offers. By the end of December, they had committed almost 85% of the harvest at histori-cally high price levels (average prices of sales per tonne: wheat 210, barley 200, oilseed rape 475).

Few exports over the fi rst six months of the 2012-2013 campaignSales delivered over 2012 rose to 1,380,000 tonnes against 1,320,000 tonnes in 2011.On the world market, France was subjected to competi-tion from Russia in the fi rst six months of the 2012-2013 campaign. This greatly limited the rhythm of exports. This slow down in exporting had an adverse effect on the acti-vity of our port silo in Caen. However, over the whole of the 2012-2013 campaign, the Cooperative should make signifi cant exports in spite of the disparate quality which will entail stricter targeting on batches of exportable quality.

The strategic thrusts for the sector for 2013Three strategic approaches have been defi ned for the next campaign:• To re-launch the construction of storage capacity in those areas where Agrial is weak (reduction of transport costs linked to the transfer and improvement in the quality of management of wheat).• To persevere with the qualitative improvement of wheat in order to better serve clients on the increasingly demanding and competitive export outlet.• To pursue the improvement in commercial sales policy in a very volatile market, by putting the emphasis on reactivity faced with price increases.

Breakdown of 2012 cereal collection (in tonnes)

Barley126,900

Wheat and hard wheat953,000

Maize 191,100

Sunflowers 18,600

Oats andtriticale

47,100

Beans and peas 15,700

Oil seed rape 132,100


A reduction in production and healthy prices

French production of adult fi nished bovine animals fell sharply in 2012 (-6%) compared with the high level of 2011 and the same tendency can be seen in the whole of Europe.This reduced offer raised prices in all categories: the ave-rage price of adult bovine animals increased by 14.5% in 2012 compared with 2011 (source France AgriMer), following an increase of 8.4% over the previous year. For young cattle, the reduction in supply was combined with the buoyancy of livestock exports to Turkey in the fi rst part of the year. But the increase in customs taxes blocked this outlet at the beginning of autumn and so it is very diffi cult to build a strategy on this market. In adult bovine animals, prices have been also strong, in particular for beef breed animals, reaching record levels. In this category, the sizeable de-capitalisation observed in 2011 did not occur over this fi nancial year (notably in spring because of the drought.)With 149,313 animals sold, the activity of Agrial’s farmer organisation (FO) of cattle producers fell by 5.9%, across the board.

Worries about the availability of dairy cowsAlthough the reduction in business activity of the FO in young cattle has been relatively limited, this is not the case in our region where the situation is of concern. The reduction in the production of young dairy cows is worsening. This is a consequence of the decision on the part of certain producers to cease raising 8-day calves. This trend must be of interest to all operators in the Meat Division, in particular during a time of diffi culty in sourcing.

A satisfactory level of placing of grazing calvesIn spite of an unfavourable situation (increase in charges, competition in vegetable production, a long and diffi cult maize harvest) and after a rather uncertain start to spring, the situation concerning grazing calves has been fairly stable year on year. This good performance translates a real dynamism in fattening in our regions. It is true that the direction taken by prices for two years has allowed a level of profi tability for production.

Increases in cash fl ow: a long awaited initiative by productionWhatever its shape, partner funds or “new investor”, the FO consolidated in 2012 its arrangement to make fi nan-

cial support available to members for the production of grazing calves. About 11,000 animals have, in this way, benefi ted from these advances for a global sum of over 5 million euros. In addition, the council of the OP confi rmed the implementation of a specifi c action at the beginning of autumn to counter the slow start of the campaigns for grazing calves. This action which was limited in time and in the number of animals eligible has been a real success with members.

The need to review the technical-economic approach to the production of meatOver the fi nancial year 2012, the French cattle business decided to adopt a new support system for production in the matter of technical-economic approach. To evaluate performance, train, make comparisons, these are the objectives of this approach using new tools “Cap Eco” and “Couprod”, common to all structures which may be deployed on the ground by our teams.

A plan to modernise meat production facilitiesThe fi nancial year 2012 was also marked by the launch of the support system for the creation or extension of fattening houses. The objective is to create quickly 5,000 fattening pens. This plan, characterised by support for the rearing space and whose level varies according to the size of the investment, is an ambitious programme to ensure continuity of volumes and the supply of slaughtering and cutting plants of the future.

UPSTREAM DIVISION > CATTLE

Breakdown of 2012 activity (in head counts)

8-daycalves

17,931

Storecattle

29,921

Young bulls54,225

Steers and cows47,236


UPSTREAM DIVISION > PIGS

Economic performance at the heart of priorities

Three main elements marked pork production in 2012:• production down whereas it had been growing for several decades;• prices up;• feed costs which are rising with the surge in raw materials.

Pork production has fallen in most large countries of the European Union (by -2% to -6%), with the exception of Spain. In France the reduction has been 2.5% and can be explained in particular by the worsening economic situa-tion of producers, following several years of crisis and the introduction of the animal welfare directive. The average price in 2012 on the Pork Market in Brittany was 1.45/kg compared with 1.31/kg in 2011 (+11%) but includes wide variations over the year, linked to fl uctuations in the European offer.At the same time, producers were faced with a signifi cant rise in the costs of feed. Between the 1st and 2nd halves of 2012, the average cost of feed increased by 46/tonne i.e. 0.15/kg of pork. 2013 started in this unsettled context related to feed and the fall in the price of pork, but the situation is expected to improve in the next few months.

Agrial’s production in declineThe scope of Agrial’s pork business was concentrated around the members of the FO following the decision to cease the business activity of the companies Socav et Porc’ Innov. This naturally resulted in a reduction in pro-duction of the FO which sold 780,000 pork pigs in 2012 (-6%), 162,000 piglets and 13,600 cull animals. In addition, 18,900 breeding animals were marketed of which a quarter were outside the FO. The performance of the Gène+ genetic blueprint should be noted and more particularly of the Youna sow, with almost 30 piglets weaned per sow.On the outlet side, 69% of the pork pigs from the Agrial Pigs FO are slaughtered by the Bigard-Socopa group and 85% of pigs marketed by Agrial are produced within the framework of a quality line.

Market shares in feed bolsteredThe feed business of the Pigs FO represented 198,000 tonnes of reconstituted feed. Although ceasing integrated production has an adverse effect on sales of the tonnages of compound feed, Agrial has done better than retain its market shares with members of the FO.

Teams mobilised to bring buildings up to standardThe Buildings team has been mobilised to support breeders in bringing their buildings up to the “welfare” standards for pregnant sows. At the 1st January 2013, 85% of farms were in conformity with the regulation and 6% decided to leave the farrowing business. En 2013, all units will be in conformity.

In 2013, the work of the farmer organisation, which has restored its economic performance, will revolve around three main axes:• to support the business of 800,000 pigs;• to help breeders raise the technical-economic perfor-mance level;• to strengthen relations with partner slaughterers in order to ensure they have a supply adequate to their require-ments and to create value for breeders.

2012 breakdown of pigs (by quality sector)

EQC pigs14%

Standardpigs

13%

Wheypigs

12%

Label Rougepigs

11%

Cosme pigs4%

Pigs raised on straw2%

Organic pigs1%

CCP pigs43%


A fi nancial year affected by the impact of the implementation of rearing standards

In line with forecasts, the value of Agrial’s Eggs business fell signifi cantly in 2012: 107 million eggs marketed compared with 134 million the previous year. Following two complicated fi nancial years, activity has returned to growth with a positive result in 2012.Within the Eggs business, Agrial manages pullet production. After a very diffi cult 2011, production planning has been more consistent. The demand for pullets for cage rearing is showing a reduction. In 2012, Agrial marketed 1.160 million pullets compared with 1.031 in 2011.

French egg production has fallen by 14% in two years as a consequence of the effect of the application of the new rearing standards. In 2012, this change had several consequences:• a net increase in egg prices. For a short time, the price exceeded 13 per 100 eggs (Rungis quotation), that is more than double the average price recorded in 2011. We would note, however, that production costs also increased, driven by the rise in the cost of feed.• an expansion in imports to compensate for the reduc-tion in French production.In consumption terms, in spite of the price increase, household purchases continued to rise (+1.2% in 2012). The demand for eggs produced by units using alternative systems (free-range, Red Label, organic etc.) is growing and in France and Europe a change-over to these new production methods can be discerned.

The production of standard eggs down in favour of alternative eggsSales of Standard eggs which represent 35.9 million units are down by 53%, a reduction which can be lar-gely explained by the closure of two units which did not invest to conform to the new standards. On the other hand, sales of alternative system eggs increased by 20% with 71.3 million eggs marketed. Over the fi nancial year, we registered the start of fi ve new units: three Red Label and two for organic eggs.

A strengthened partnership with the Société Avicole de l’OuestThe production of label and organic eggs is marketed within the framework of the partnership with the Société Avicole de l’Ouest which manages a packaging centre near Brécey (Manche). Over the fi nancial year, Avicole de l’Ouest has made large investments which will enable it to pursue its commercial development in the growing markets and which will give our farmer organisation, the leader in this fi eld, the ability to expand production on Agrial Cooperative’s territory.

2013 will be noted for a return to large scale production which will require vigilance vis-à-vis changes in markets.We are going to support organic egg producers in brin-ging their buildings up to standard. The regulation now requires 6 hens per m2 as against 9 previously (effective from the 1st January 2014). At the same time, we are continuing with the work already started with producers aiming to improve health protection measures in rearing and technical-economic performance.

Quantities of eggs sold in 2012 (in million units)

Open air 10.3

Organic 15.4

Standard35.9 Free range

7

Label Rouge38.6

UPSTREAM DIVISION > EGGS


UPSTREAM DIVISION > SERVICES

Securing, developing and ensuring sustainable production

The Agrial Services department helps members to develop their production units.It helps to ensure that units are up to standard in order, notably, to meet the regulatory and specifi c requirements relating to production and respect for the environment. The work of the Division concentrates on agronomy, the environment and the design of buildings. In a fairly favourable agricultural situation, activity linked to agronomy has expanded, and has remained stable in the fi elds of environment and buildings.

5,900 analyses carried out in 2012The number of soil analyses increased in 2012. Beyond regulatory obligations, this is the result of a more sophisticated approach by farmers who are relying on better knowledge of the soil and its potential to improve crops. The piloting and reasoning underpinning nitro-genous fertilisers remains important with 2,940 N-credit tests carried out at the end of winter and 800 RAMSES monitors implemented.The evolution of the Corpen (French Steering Committee for Environmentally-friendly farming practices) standards for milk production and the nitrate directive have produced a need for producers to be reassured on these matters.

Stability of Buildings activityThe technicians in the Services department assist mem-bers in drawing up and designing their building projects. The number of cases remained stable in 2012. On the other hand, requests are showing an increase at the start of 2013.

2,950 members trainedTraining has always been an important part of the work of the Services department. The subjects on offer are varied but the Certiphyto fi le remained paramount in 2012 with the requirement for farmers and agricultural employees using phytosanitary products to obtain their individual accreditation between now and 2014.

Key fi gure

3,220this is the number of members assisted in 2012


DIVISION > SEEDS

A clearly posted strategy for development

2012 was a constructive year made of important investments, search for partnerships, plans to increase multiplication capacities.

15,600 ha of multiplicationWith 15,600 ha of multiplication, 2012 was the strongest production year. The surface areas increased over the whole variety range and the three companies in the Division. In spring 2012, Centre Sem in Indre-et-Loire reached a new record for bags with 1,325,000 units of maize, i.e. 6% of the needs of the European market and set up a record multiplication plan of 4,060 ha. Overall, yields were foremost, with, however, qualitative problems of germination capacity which will increase costs and losses at the sorting stage.For forage seeds, the stock has been reabsorbed and the 2012 production plan is in line with our objectives with 3,700 ha in situ and harvested with Benoist Sem (Sarthe). Yields are disparate according to variety and marketing in autumn 2012 was somewhat depressed because of a wet summer which was unfavourable to meadow crops.Over 6,800 ha of straw cereals were ploughed (Centre Sem and Saint-Sylvain). The straw cereal campaign was notable for harvesting problems, especially in Saint-Sylvain (Calvados). The heavy rains reduced the germination rates. This cumulative lower quality at late harvest times caused delays in processing and delivery to our members and other clients (Semences de France and Limagrain). An action plan has been drawn up to improve the level of service for 2013. In all, Saint-Sylvain and Centre Sem bagged more than 280,000 quintals of certifi ed straw seeds, i.e. an increase of 5%, notably on Agrial’s circuit (+15%).

Search for partnershipsAgrial’s objective is to secure and develop business activities by, in particular, seeking supplementary and complementary multiplication contracts.This has been achieved for forage seeds with the transfer of multiplication contracts set up in Picardy by the Laboulet company, in receivership to Benoist Sem. This transfer relates to 1,400 ha and diversifi es our business activity (fodder and lawn species).

In parallel, we have set up a partnership guaranteeing production with Semences de France and we have created, together with RAGT, the Semara company. It will operate an industrial tool common to the two partners, and which is, at the moment, under construction in Maresché (Sarthe). In operation for the 2013 harvest, this tool will carry out the activities of sorting, mixing and packaging for RAGT and Benoist Sem, which will keep their own sales activity. It will be able to manage 8 to 10,000 ha of production which will make it a tool of European dimensions.At Saint-Sylvain, the production of hybrid barley is expanding and we expect to expand production in the years to come.As far as maize seed is concerned, Agrial has renewed, until 2015, the framework contract in force between Sem and KWS.

Investments to support our expansionWith Centre Sem, a new bagging line was put into service in August to meet the regular expansion in maize production and to benefi t from multi-use bagging tools. It enables small packages of cereal units to be produced as well as the bagging of maize. The area of covered storage has been increased by 2,000 m2.At the Saint-Sylvain station, an optical sorter has been installed. It enables a very high level of sorting to be carried out, indispensable for the work of certain productions such as hybrid barley.

2012 breakdown of surface areas by type of production (in hectares)

Straw cereals6,300

Maize4,060

Oil seed rape320

Fodder5,000

DIVISION > RURAL DISTRIBUTION


Against a background of crisis and unfavourable weather conditions

The Rural Distribution Division’s turnover for 2012 achie-ved 273 million euros—an increase of 2.4%. This growth is explained mainly by the expansion of DIY-materials (+7.3%) and good growth realised with members.

The extension of the offer stimulates customer activityThe DIY and gardening markets have been disrupted by the arbitration of consumption of households in this time of crisis and restricted buying power. This phenomenon was worsened by the bad weather which did not favour sales of garden products.In this uncertain context, the Rural Distribution Division of the Agrial Group gained from the line taken since 2006 to extend the offer to products required for household work and home decoration.The demographic changes published since the last census confi rm that there has been signifi cant expansion in rural areas to the detriment of large towns. The construction of private houses with gardens in these areas is creating a dynamic for our three retail brands: Agrial, Point Vert and La MAISON Point Vert, designed to become local multi-specialist stores.

Being local reinforces the relationship with membersBusiness with the Cooperative’s members in the area of agricultural supplies and in consumer goods has shown a signifi cant increase (+6.3%). This performance reinforces the strategy and networking of the rural area which, on a daily basis, encourages links with members.

Advantages to pursue steady developmentThe multi-specialist positioning of our concepts with agricultural ranges, DIY and gardening is aimed at three types of clients: the members, craftspeople and retail customers. This is the strongpoint of our network of points of sale and we must maintain it. To do this, we must increase our market shares in DIY and materials by increasing our offer and by progressively rolling out the La MAISON Point Vert brand.

Logistics, an essential factor in reinforcing proximity, will also constitute a lever of development with the opening of a new platform in Sarceaux (close to Argentan in the Orne department), in the heart of the Cooperative’s territory. Started with 18,000 m2 of dispatch area, it will be responsible for order preparation and deliveries to the 230 stores in the network from September 2013. Finally, we are acquiring tools which will enable us to intro-duce new dynamic marketing methods in line with the expectations of members and clients. The loyalty card is part of this strategy (140,000 cards in use in 2012) as well as the development towards a multichannel approach with the launch of the on-line ordering service www.agrialpro.com. This commercial site is innovative in the domain of products and agricultural equipment because of its “order and collect” system in the Cooperative’s local stores.

Relationships in stores, a factor of differentiationThe Cooperative has always affi rmed its determination that each point of sale, in addition to merely selling items, should remain a lively meeting place. Our network of stores contributes to the life of rural areas and is a meeting place for a daily interchange between the agricultural world and that of the public in general.The 1,000 employees in our stores are trained to facilitate this: welcome, friendliness, advice, professionalism are words engraved in the marketing policy of the Agrial network. These are essential elements which make us stand out from other outlets and be appreciated by most members and clients. This is an advantage in an increa-singly tough competitive environment.

Breakdown of 2012 activity (in million euros)

Agricultural distribution

Agriculturalsupplies

80

Specialiseddistribution166.4

Animalfeed26.7

DIVISION > FARM MACHINERY


A market buoyed up by the good agricultural situation

The positive outlook in the agricultural situation, in particular in fi eld crops, and the prospect of the removal of the provisions for investments have stimulated the French market for agricultural machinery and rearing equipment.In this context, the turnover of the Farm Machinery Division has increased by 11% in 2012. Agrial has taken advantage of these buoyant markets to strengthen its teams and consolidate its various offers of after-sales services.

V3PRO, a structure dedicated to the JCB brandOn the national level, the strong rise in sales of new tractors noted in 2011 has continued in 2012 (+13%). On this market, SM3 and SAMA showed improvements lower than the national average but have strongly developed their activities in other equipment: second-hand tractors, combined harvesters etc. The most signifi cant event of the year was the creation of the V3PRO subsidiary, devoted to JCB and specialising in farm handling equipment. This activity had formerly been provided by SM3.Of note also was the construction of an SM3 dealership near Mayenne and the renovation of the SAMA site of Parville in the Eure department.

Elevance developed the MIOne robotic milking systemAfter a hesitant start to the year, Elevance’s activity had recovered well by the end of the year with the arrival of the MIOne robotic milking system. The market for robots now represents one new installation out of two in milking machinery. Elevance has benefi ted from this favourable situation, showing a turnover increased by 24%.

The “Multibox” robotic milking system developed by GEA was warmly received by farmers. To reinforce in 2013 the good start made by this activity, the Farm Machinery Division has reorganized and reshaped Elevance’s commercial structure by equipping itself with a specialist sales staff.

An organisation clarifi ed within the DivisionThe Farm Machinery Division has taken advantage of the resilience of the market in 2012 to make its structures more specialised in order to have distribution networks more clearly identifi able by its clients and to set up a high level after-sales services.It now has four subsidiaries:• SM3 distributing CLAAS;• SAMA distributing Massey Ferguson;• V3PRO distributing JCB;• Elevance distributing GEA.

Increases in the Farm Machinery Division’s turnover (in million euros)

2012

91.884.3

2011

66.6

2010


DIVISION > MILK

A year full of alliances and acquisitions

In the course of 2012, Agrial confi rmed its intentions of becoming a signifi cant player in Milk processing. The Group consolidated its participation in the capital of Délicelait by becoming the majority shareholder in this company and it created Senagral in partnership with the Senoble group, a company specialising in the production of ultra-fresh dairy products. These projects will give supplementary rights to produce to members and prepare for the end of milk quotas scheduled in 2015. This is also the reason why Agrial has decided to propose an increase in the registered capital of members which will increase from 2% to 7% in 5 years. The turnover in 2012 of the Milk Division reached 981 million euros, for a total collection of 1.35 billion litres, from 3,650 producers, of whom 2,600 were members of the Cooperative.

Decline in milk productionEuropean milk collection showed a signifi cant growth in the 1st quarter, and then it fell below its previous year’s level in the 2nd half of the year, as a result, primarily, of the surge in the price of raw materials, cereals and soya. In France, this drop was evident in all regions, with a marked reduction in certain areas.The price of milk paid to producers fel l back by

8/1000 litres on average in 2012, i.e. -2.5%. But the price rose from August, infl uenced by the improvement in the prices of butter and powdered milk. As for the market in dairy products, it was hit by the global economic situation and this resulted in a decline in sales of drinking milk, butter and ultra-fresh products. On the other hand, world-wide demand, especially from developing countries, remains constant, a fact that gives hope that 2013 will be a better year.

In this context, Agrial’s members delivered 961 million litres which is a reduction of 1.8% compared with 2011, with a steep fall noted over the summer, underlining the usual seasonal trend in contrast to the increase observed over previous years.Following the reform of volume management and the confi rmation of the abolition of the French Attributed Fiscal Tax (TFA), Agrial is more than ever responsible for organising

the monitoring of the volumes delivered by its members. For 2012-2013, Agrial, together with the Bongrain Group, has decided to apply the provisionary allocation at 4%.

Sustainable milk productionAgrial’s Milk Division has employed several approaches to contribute to sustainable milk production amongst which may be quoted:• ISO 22000 certifi cation for milk collection and Chilling at the farm;• the CO2 emission reduction charter for milk collection, jointly with the ADEME;• the Responsible Milk initiative with Compagnie Laitière Européenne (CLE), focusing particularly on the reduction of the carbon footprint from the milk unit;• the Unilever approach required by this client from all its agricultural producers.

Anticipating the abolition of quotas in 2015, Agrial has car-ried out a survey on milk resources with its members and producers. The objective of this work is to renew the links between the technicians from the Milk Division and produ-cers in order to be better prepared for the changes their units will have to make in the years to come.

2013 prospects2013 will be devoted to consolidating the assets of the Milk Division and to preparing for the merger with the Eurial Group. This proposed merger announced at the start of 2013, would represent an extra collection of 970 million litres of which 830 million would be cows’ milk and a turnover of more than 800 million euros.

Senagral654

Agrial359

Délicelait77

Breakdown of 2012 turnover (in million euros)


DIVISION > POULTRY & MEAT

A diffi cult year and a lower but mixed performance

2012 was a diffi cult year for Agrial’s Poultry Division with the cost price of living birds experiencing a sharp reduction because of the increase in the price of cereals. In spite of this, the Division remained buoyant by continuing to diver-sify into the dressing of butchers’ meat with the acquisition of the Maître Jacques and Charcuterie Cosme companies. The Poultry Division is now called Poultry & Meat. It has 5 main business activities: the upstream (Poultry Farmer Organization), the Poultry industry, the Meat industry, trading and services (livestock and refrigerated transport).This external growth is at the heart of the rise of 38% in the turnover which reached 287 million euros in 2012. The Poultry & Meat Division is producing at the moment 75,000 tonnes of fi nished products and has a work force of a thousand people.

The Farmer Organisation’s production increasedAgrial’s Poultry Farmer Organization (FO) is continuing with its policy of conquering of areas in standard as well as label production. Activity has increased by 3%, especially thanks to its label products up by 12%. But the FO’s accounts have worsened because the increased costs of feed have not been passed on to producers.On the technical front, signifi cant gains in productivity have been made. In the same way, consumer indices have been improved, thanks to the joint efforts of the farmers and Agrial’s technical-economic consultants. The plan to give fi nancial help for the creation, improvement and renovation of buildings in 2012 has also enabled six new building to be erected. These actions will be continued in 2013 to benefi t the improvements in the technical performance of producers.

The Poultry industry sector hit by the increase in the price of live animalsThe slaughtering and processing of poultry are carried out by the Secoué company and the Socadis company which specialises in label poultry. The total volume sold has remained stable from year to year, but business has been adversely affected by the increase in the price of live animals, a cost which it has only partially and lately been able to pass on to distributing clients. In addition, the pressure of imports which have been increasing for several years, has not helped the application of price rises wanted by the French industrials in the sector.

On the industrial level, the investments implemented in 2012 in the cutting plant of Secoué have not yet brought all their fruits in terms of productivity improvements. The full return on investments should start to take effect in 2013.

Confi rmation of the good performances in trading activitiesThe trading activities of the Poultry & Meat Division are mainly carried out in the Rungis internation gross market. Our three marketing companies with a presence in the Rungis poultry hall have seen their sales increase by 6% in 2012 following a 19% increase in 2011.The Les Halles de la Drôme company which has a more limited business in the South of France, has confi rmed its marketing revival with its business showing an increase of 48% compared with 2011.

2012, the year of diversifi cation in meat processing2012 was notable for 3 major acquisitions:• François Distribution, a specialist in meat cutting and distribution to restaurants and hotels in the Paris region, will create logistics synergies with Avigros.• Maître Jacques, based in Rennes, has a meat processing business destined for retail counters and supermarkets. In 2012, the company had a turnover of 40 million euros.• Finally, the acquisition of Charcuterie Cosme (20 million euros turnover) adds to Agrial’s Poultry & Meat Division’s artisanal knowledge in terms of meat processing. In addition, it strengthens Agrial’s Pigs producer group who, at the moment, supply 60% of pork processed by the company.

Breakdown of 2012 turnover (in million euros)

Producergroups75

Distributionand services6

Poultryindustry87

Trading104

Meatindustry

69


DIVISION > BEVERAGES

Diversifi cation of the portfolio

The Beverages Division which comprises ciders, apple juice and fresh fruit juices had a turnover of 162 million euros in 2012, up by 7% compared with the previous fi nancial year. The important events of the year were, on one hand, a very poor apple harvest and, on the other, the acquisition of a company in the United States, the fi rst overseas one for the division. This acquisition also enables the Agrial Group to gain a foothold, for the fi rst time, outside Europe.

A lower apple harvestFollowing a record harvest in 2011, the apple harvest was, this year, hit by unfavourable weather conditions which affected pollination in the spring as well as the size of the fruits at the end of the summer. So, the 2012 collection barely reached the 130,000 tonne mark, a 40% reduction compared with the previous year. It was the lowest level for 5 years.68% of the division’s fruit comes from orchards belonging to members of the Cooperative. This share has been increasing on a regular basis for 4 years.

Economic progress shared with producersThe “Apples for processing” Farmer Organisation (FO) has continued its activities to support farmers: implementing plans to assist production, financing of equipment, supporting of irrigation and setting up of alternative systems to replace the use of phytosanitary products.With a view to sharing economic progress, the FO has set up a “participating contract” for members. The price of fruit is linked to the performance of the Beverages Division. In its fi rst year, more than a third of the FO’s producers have agreed to this new contract.

Increases in capacity and successful partnershipsThe Beverages Division has launched a programme aimed at increasing and improving its capacity to process and store apples and to bring closer together the processing sites and production zones. Among the actions carried out in 2012, of note is the installation of an extraction line on the Theil-sur-Huisne site in the Orne department. A series of sterile fermenting rooms has also been acquired. It will be devoted to the storage of apple juice and will be deployed on three sites in 2013.In addition, the division has consolidated its partnership with the Phare Ouest company: all the Breizh Cola range

is now bottled on the Loïc Raison factory in Domagné (Ile-et-Vilaine).A partnership agreement has also been signed with Les Vergers du Pays d’Auge for the manufacture and packa-ging of artisanal cider.Finally, taking into account the strong position of the Beverages Division on the French market, its expansion is evidenced also by developments abroad. Because of this, Agrial acquired, in March 2012, the Manzana company based in California and specialising in the processing of apple juice, compotes and vinegar. This was an opportu-nity for the division to expand into a very large market and to create a bridge head in the United States to export its French ranges (ciders and concentrates).

Diversifi cation of its portfolio without neglecting its originsThe cider business currently accounts for less than 50% of income for the Beverages Division following numerous diversifi cations and technical and commercial partnerships in the fi elds of fruit juices and sodas. But it is not neglecting its original business and is continuing with actions for “the re-conquest of cider”, by innovation and marketing: the small 27.5 and 33 cl Loïc Raison and Ecusson bottles can be found in supermarkets and restaurants, bars and cafés, and the Ecusson rosé cider has been an undeniable hit with almost 2 million bottles sold over the year.On the fresh fruit juice market, Danao has launched a multi-vitamin juice, chosen the best new product in fruit juices in 2012 and “taste of 2013”. Their new recipe has been well received by the market.2013 will be a key year in confi rming the success of these new ranges.

2012

41%

36%

2011

33%

2010

Increases in the share of supplies from the orchards of FO members


DIVISION > VEGETABLES

Continuing expansion in France and Europe

Agrial’s Vegetables Division is continuing with its expansion plans in spite of a slight reduction in European consump-tion since 2007. The weather, very rainy from spring on in France and Europe, caused disturbance in production levels. This was especially true of carrots whose price increased signifi cantly. In this context, the consolidated turnover for the Vegetables Division increased by 6.7% to 728 million euros. This improvement can also be explained by external growth in France and Spain.

Priméale increases its geographical portfolio in France and Europe2012 saw the continuation of increases in the volumes of fresh raw vegetables, due mainly to new geographical units:• The acquisition of Ferpasat, near Valladolid in July 2012 to develop, amongst other things, in the Spanish market in carrots;• The taking up of a majority shareholding in La Légumière, in Brittany in France, via CBC which guarantees supplies of shallots;• The signing of a partnership deal with Nanteurop in the Nantes basin in France, Florette’s historic supplier of lamb’s lettuce. This was achieved by forming a joint subsidiary, Nantial. It offers important synergies for the whole of the Vegetables business (lamb’s lettuce, radishes, baby leaves).• Taking a share in the Lubac business to complete the transport unit within the AJYR sphere of infl uence, with Transports InterLégumes.To accommodate this growth, Priméale’s managerial and legal organisation has been restructured. The SAS PRIMEALE Holding now includes the 4 poles of raw vege-tables business: Prim’co, AJYR, Vert Frais and Nantial.

Activity and performance are at the forefront of the raw vegetables businessPriméale marketed 556,000 tonnes of vegetables in 2012, an increase of 6% compared with 2011, a part of which is coming from external growth. The early carrot campaign in the Landes area was exceptional, the result of a delay

in production due to very wet weather in the spring. The asparagus campaign was also very good, a positive start to the partnership set up in 2011 with Maisadour within the Prim’co pole. For potatoes, after a diffi cult end to 2011-2012 season, the new campaign started with more solid prices.On the marketing side, 2012 was the year for the Priméale brand. It has developed an advertising campaign around the idea of vegetables for pleasure with a new tagline: “When pleasure is at a premium, it must be Priméale”.

Florette is maintaining its volumes and sales in spite of the crisisThe ready-to-use fresh salads and vegetables market has increased by 4.6% in value over the whole of Europe. This “partly-mechanical” growth compensated for a reduction noted in 2011 due to the E-coli crisis which particularly affected the German and Belgian markets. The positive increase in the market is still a result of the heart of the business that is salad leaves (baby leaves and mixed salads).The increase in sales involves both distributers’ brands—up by 4.2%—and national brands which continue to grow by 5.7% on average over the whole of Europe but with differences between countries.

In this context, Florette has maintained its tonnages. The business sector has been led by the Northern European countries where it has benefi tted from a rebound in the consumption of fresh vegetables which favoured ranges of salads, especially duos.In particular in France, sales in volumes of Florette products have reached record levels with 13,234 tonnes.

In the United Kingdom, the Florette brand has continued to grow, attaining 10.7% of market share while across the distributers’ labels, a move has been made towards more profi table markets. In Germany, Florette profi ted from the increase in consumption following the E-coli crisis of 2011. With 17% market share, it gained 8 points compared to last year. On the other hand, sales by Vega Mayor and its subsidiaries suffered as a result of the worsening economic situation in Spain where turnover fell by 8%. In France and Spain, results have improved thanks to a substantial concentration on optimising industrial and commercial processes.

>>>


DIVISION > VEGETABLES

To sustain its sales, Florette has initiated two new adver-tising campaigns in France and the United Kingdom. In addition, since April 2012, Florette UK and its partner producers have been involved in a sustainable agriculture approach which has resulted in their gaining the LEAF (Linking Environment And Farming) certifi cation. The LEAF accreditation assures consumers that Florette salads are grown in line with rules of environmentally-friendly produc-tion practices.

The Créaline brand is posting its ambitionsCréaline’s turnover increased by 20% in 2012. It is particularly due to a change in the packaging of soups where glass jars were replaced by PET bottles, and to a well-received television campaign. In addition, the company is continuing to modernise its processes, achieving substantial gains in quality and production.

ProspectsFlorette set itself the objective of continuing in 2013 to expand the brand in Europe in order to cause the market to rise. But the event expected for next year is without any doubt the fi nalisation of the draft buyout of the French and Spanish parts of the Bakkavör group. This project has just obtained the approval of the French Offi ce of Competition, the Spanish Authority having already given its agreement in December 2012.

Increases in the Vegetables Division’s turnover (in million euros)

2012

728682

2011

628

2010

The annual report is producedby the Agrial Group’s institutional relations management

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