FrieslandCampina sees revenue drop alongside growth in other areas after reorganization
24 Jul 2024 --- Dutch dairy cooperative FrieslandCampina has seen a 6.7% decrease in revenue due to lower milk price and currency translation, although it made gains in other areas, the company has reported in its first half-year results for 2024.
The company says it had a “solid performance” of value-added products, but its milk business faced challenges.
“All in all, the average milk price in the first half of 2024 decreased by 3.1% to €50.09 per 100 kilograms of milk, compared to €51.70 ( US$56) per 100 kilograms of milk in the first half of 2023,” says FrieslandCampina in its results overview.
Despite this, net results for the first half of 2024 increased to €183 million (US$198 million) compared to €8 million (US$8.7 million) in the same period of 2023, while its operating profit leapt from €47 million (US$51 million) to €301 million (US$326 million).
The company says this was due to improvements in volume mix, less expensive inventories, smaller differences between commodity dairy prices and the guaranteed price, plus other cost savings. It achieved savings of €152 million (US$164.6 million) thanks to its “Expedition 2030” reorganization plan, which outlines a significant restructuring of its operations.
Optimistic despite challenges
FrieslandCampina processed 3.2% less milk than in the same period the previous year.
Jan Derck van Karnebeek, CEO at Royal FrieslandCampina, says the company is pleased with its start to 2024 despite some difficulties.
“In the first half of 2024, we have worked hard on improving our results on the basis of the Expedition 2030 strategy that we launched at the end of 2023. Starting this year, FrieslandCampina is focusing on specific product and market combinations with its seven business groups. Collectively, these business groups have the task of optimally valorizing the milk of our member dairy farmers,” he says.
“The goal we have set for ourselves is to improve our performance on the basis of the three dimensions of our performance triangle: “winning in the market, expanding our margin and generating cash.” We have achieved good progress on all of these dimensions.”
Decrease in milk supply
Karnebeek adds that due to uncertainty about the future milk supply in the Netherlands and beyond, the company will need to maintain scale in its milk volume.
In the first half of 2024, FrieslandCampina processed 3.2% less milk than in the same period the previous year — approximately 4.7 billion kg of member milk.
It attributes this decline to member dairy farmers who have opted for the Exit Scheme, a condition set by the European Commission for approving the merger between Friesland Foods and Campina, which ended on November 9, 2023.
Last year was a tough period for the Dutch giant. It revealed a revenue drop due to unfavorable market conditions, including a declining consumer market and high inflation. It also announced plans at the end of 2023 to cut 1,800 jobs worldwide in an effort to make major savings.
