News

FrieslandCampina profits plummet

5 Sep 2016

FrieslandCampina saw profits plummet by 16.7% over the first half-year 2016 to €160 million compared to the same period in the previous financial year as basic dairy products were produced that had to be sold below cost.

FrieslandCampina profits plummet

FrieslandCampina saw profits plummet by 16.7% over the first half-year 2016 to €160 million compared to the same period in the previous financial year. Due to the significant increase in member dairy farmers’ milk production (+11.9%), basic dairy products such as milk powder, foil cheese and butter were produced that had to be sold below cost, the company said. Growth in volume was realised in infant nutrition in China and South-East Asia, dairy-based beverages in South-East Asia and Eastern Europe and ingredients, with improved results.

Revenue decreased by 2.2%, down to €5,522 million. The decrease in revenue due to lower sales prices was largely compensated by higher volume. The milk price for member dairy farmers decreased to €30.24 per 100 kilos of milk (first half-year 2015: €36.48) due to the lower guaranteed price for raw milk and the lower value creation (performance premium and reservation in member bonds). The interim pay-out amounts to €1.170 per 100 kilos of milk (2015: €2.018).

Operating profit decreased by 18.8% to €255 million over the first half-year 2016 (first half-year 2015: €314 million). Currency translation effects had a negative effect of €30 million on operating profit.

Gross profit decreased by 5.6% to €938 million (first half-year 2015: €994 million) because sales prices incurred a quicker decrease than the cost. Sales increased in volume; however, margins were at a lower level than in the first half year of 2015. Due to the high milk supply and the lagging demand, basic products were mostly sold under cost. Direct sales of raw milk in the spot market also showed a loss.

Profit over the first half-year 2016 decreased by 16.7% to €160 million (first half-year 2015: €192 million). “We can look back on a special first half year,” said Roelof Joosten, CEO of FrieslandCampina. “FrieslandCampina is doing well in Asia and with ingredients, realising a fine 2.3% growth in volume with added value products. Due to the increased milk production, we had to process significantly higher volumes of milk into basic dairy products that we could not sell at a profit in the market. This is visible in the 17% decrease in both profits and milk price for the member dairy farmers.”

Milk prices have bottomed out, the company believes. In the second half year of 2016, worldwide supply of milk is expected to decrease compared to the first half year. Demand for dairy products is expected to only show a modest increase over the second half year of 2016. This is due to the limited purchasing power in many oil-exporting countries, political instability in many countries, the limited demand for dairy materials in China and Russia continuing to block the European Union’s dairy products, FrieslandCampina said.

The effect of the European Commission’s measures to reduce milk production in the European Union based on support measures is as yet unclear, the company continued. The impact of possible voluntary restriction of production of cooperatives or producer associations is also unclear. The Netherlands is expected to impose measures to reduce phosphate production in cattle farms to fall under the level of 2 July 2015. It is as yet unclear whether or not this may lead to a reduction of the milk production in 2016.

Related tags

Dairy

Related news

UK High Court allows Oatly to use 'milk' on packaging

UK High Court allows Oatly to use 'milk' on packaging

17 Jan 2024

Oatly has scored a landmark victory in the use of the word milk after the UK High Court ruled against the country’s dairy industry and permitted the term to be used on packaging.

Read more 
How brands are overcoming challenges in the plant-based sector

How brands are overcoming challenges in the plant-based sector

16 Jan 2024

Following the turbulent evolution of the plant-based market in recent years, industry players are finding innovative ways to tackle challenges such as taste, price, and nutrition and are in turn unlocking new opportunities for growth.

Read more 
Mapping the rise and fall and (rise, again?) of the plant-based sector

Mapping the rise and fall and (rise, again?) of the plant-based sector

15 Jan 2024

Recent challenges in the plant-based sector such as consumer acceptance and price inflation led to dips in certain regions while others surged. Kalina Doykova, senior research analyst at Euromonitor, shares her insights into the evolution and future tr...

Read more 
Meet the innovative ingredients showcased at Fi Europe’s New Product Zone

Meet the innovative ingredients showcased at Fi Europe’s New Product Zone

3 Jan 2024

The Food Ingredients category at Fi Europe’s New Product Zone featured 19 distinct and innovative products. From fermented delights to sustainable proteins, these ingredients are ready to make their mark in the market.

Read more 
Fi Europe’s New Product Zone elevates the nutrition of everyday indulgences

Fi Europe’s New Product Zone elevates the nutrition of everyday indulgences

22 Dec 2023

At Fi Europe 2023's New Product Zone, eight health ingredients, each offering an enhanced nutritional profile of various products, were on display. These ingredients address the evolving needs of the food and beverage industry and cater to consumers se...

Read more 
Fi Europe’s New Product Zone explores fresh possibilities with five natural ingredients

Fi Europe’s New Product Zone explores fresh possibilities with five natural ingredients

20 Dec 2023

Fi Europe 2023's New Product Zone unveils five natural ingredients, each catering to the growing demand for clean products and embodying ethical and sustainable choices for today's conscious consumers.

Read more 
Exploring the path to replicating breast milk's magic in infant formula

Exploring the path to replicating breast milk's magic in infant formula

17 Nov 2023

While breast milk is often hailed as nature's gold standard for infant nutrition, it’s not always readily available. Enter infant formula enriched with human milk oligosaccharides (HMOs), a game-changing product that seek to mirror the composition of b...

Read more 
A look at the latest ‘gut health for immunity’ product launches

A look at the latest ‘gut health for immunity’ product launches

25 Oct 2023

From Lipton’s probiotic tea to Babybel’s snack-sized cheeses and smoothie powders, we look at some recent product launches that can benefit immune health by targeting the gut microbiome and a healthier digestive system.

Read more 
Advocacy groups condemn EU Commission for backpedalling on animal rights

Advocacy groups condemn EU Commission for backpedalling on animal rights

3 Oct 2023

Amid rumours that the EU may abandon its plans to improve animal welfare in farming and end the use of cages, many stakeholders have condemned this possibility and urged the EU to reconsider.

Read more 
Meurens Natural: Pioneering the Way in Oat-Based Nutrition

Meurens Natural: Pioneering the Way in Oat-Based Nutrition

12 Sep 2023

Meurens Natural, a European trailblazer in the organic sector for more than 30 years and expert in hydrolyzed oat syrups, powders, and proteins.

Read more