Boerenbond with MRBB: ‘The good years on the stock exchange are over’

MRBB, the financial holding of Boerenbond, warns of a few lean years on the stock exchange. Although the company had an absolute top year in 2021, “the last straw has been squeezed out of the lemon”.

The company MRBB, in full cvba Maatschappij voor Roerend Bezit van de Boerenbond, is one of the richest and most solid companies in the country. The figures for the financial year 2021 show this once again. The company sits on a mountain of cash investments and liquid assets of more than 2 billion euros and has equity of nearly 5 billion euros, or 89 percent of the balance sheet.

The company MRBB, in full cvba Maatschappij voor Roerend Bezit van de Boerenbond, is one of the richest and most solid companies in the country. The figures for the financial year 2021 show this once again. The company sits on a mountain of cash investments and liquid assets of more than 2 billion euros and has equity of almost 5 billion euros, or 89 percent of the balance sheet, half a billion euros. It will guide the company through difficult economic weather and is a legacy of the 1930s, when the Farmers Bank went bankrupt during a banking crisis. Liquid assets have risen sharply over the past decade. At the end of 2011, it was still an amount of 714 million euros. “These investments should bring stability to MRBB’s total assets,” says CEO Marc Wittemans. “The majority of our assets are in a limited number of capital shares. KBC, Arvesta, Acerta and SBB are our strategic investments. They must also provide stable income so that we can pay a dividend to our shareholder, Boerenbond, every year. On the this way we can continue to invest in the group’s companies and in new projects that are good for agriculture and horticulture. The strategic participations are highly concentrated. Hence the diversified investment portfolio, which reduces the concentration risk.” The Boerenbond does not earn that much. much from agriculture, but primarily from financial operations. The financial subsidiary of Boerenbond is one of the anchor shareholders of KBC Group. In 2021, MRBB received a dividend of 165 million euros from the bancassurance company. This year, at least another 365 million euros will follow for MRBB, from the flow of dividends that KBC paid out in May. It was not only the KBC group that gave cause for celebration. 2021 was a farming year for MRBB, especially on the stock market. Last year, however, the stock had warned of a bubble in the stock markets when it published its annual numbers for 2020. Still, 2021 turned out to be a record year for stocks in the West, despite the new strains of Covid-19. Business profitability increased simply because of the pandemic as companies committed to accelerated digitization and made significant savings. This led to excellent results for the listed companies, resulting in MRBB achieving a total return of just under 10 percent on its investment portfolio, “which can be seen as exceptionally good”. That portfolio was then still diversified, leading to different results. The interest portfolios (bonds) gave a return of 1.93 per cent. The property portfolio achieved a return of 6.17 percent, partly due to the rapidly growing logistics centers. But the share portfolio performed best with a return of 22.55 per cent. Still, MRBB keeps a cool head. “For stocks, this will mark the temporary end of a year-long rally. In 2022, under pressure from escalating inflation and geopolitical developments, stocks will undergo clear corrections. 2021 was the last year of above-average returns, driven by stimulative monetary policy in the European Union . Future returns are estimated to be low for the investment portfolio.” MRBB has seen the economy slow down since late 2021 because “the last drop has been squeezed from the lemon”. For CEO Marc Wittemans, “equity markets were valued very high. The high earnings expectations were discounted to very low interest rates. With the added effect that bond prices were also very high.” It was the harbinger of what had long been feared, and in 2022 became a reality: the return of inflation and increasing pressure on interest rates with “an increase in inflation that turns out to be tougher than first estimated” and rising labor costs, also due to of the tight labor market. Add to this the Ukraine war, the rising agricultural and food prices and the hiccups in the logistics chains. How does it end? The financial subsidiary of Boerenbond also does not have a crystal ball. “How the economic situation will ultimately develop will depend on the geopolitical context. The most likely seems to be a freezing of the situation reached at some point. It would be accompanied by uncertainty and volatility and thus volatile financial markets.” Yet every crisis also offers opportunities. MRBB expects an accelerated energy transition, a return to more local production and thus an accelerated sustainability in society. Despite the agricultural year 2021, the dividend paid by MRBB to Boerenbond is still quite low. The amount will decrease from 33.5 million euros in 2020 to almost 22 million euros in 2021. These dividends finance the operational function of the agricultural organization. Related organisations, such as the Landelijke Gilden, the association for young farmers Groene Kring and the Catholic Land Youth (KLJ) also receive money. In addition, funds are still flowing in for various research and development projects.

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