'Strong Headwind' In Infant Nutrition Impacts FrieslandCampina In H1

By Steve Wynne-Jones
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'Strong Headwind' In Infant Nutrition Impacts FrieslandCampina In H1

A 'strong headwind' in its infant nutrition business, particularly in Asia, has impacted revenues and profits at dairy giant FrieslandCampina in the first half of its financial year.

The group said that revenue for the period was down 1.8% to €5.5 billion, or increased by 0.8% if adjusted for currency translation effects. Profit fell by 42.6% to €62 million, largely due to a €57 million provision for a court ruling in Thailand.

'Difficult' Market Conditions In Infant Nutrition

"Good results by the Food & Beverage and Trading business groups and realised cost reductions were not sufficient to offset the strong headwind in infant nutrition," commented Hein Schumacher, chief executive.

"Market conditions in this for FrieslandCampina important category remain difficult. This had a significant impact on the results of the Specialised Nutrition and Ingredients business groups."

In its Food & Beverage arm, revenues were up 1.0% (+4.1% if currency translation effects are excluded), with the group's Parrano, Chocomel and Valess brands performing well, it said.


The business also benefited from a recovery in the out-of-home channel, as well as improved performance in Pakistan and 'large parts of Africa'.

Its Specialised Nutrition and Ingredients businesses, however, were hampered by the performance of the group's infant nutrition brands in Asia, and decreased by 14.9% and 3.9% respectively.

'Cautiously Optimistic'

Looking ahead to the remainder of the year, Schumacher added that while the group is "cautiously optimistic" about the recovery in its consumer and out-of-home channels, the Asian infant nutrition market is "not expected to recover".

He also issued a word of caution on the continuing effects of the pandemic, adding, "The corona pandemic is not over yet and neither is the uncertainty that it brings, particularly not in countries where the vaccination coverage is still relatively low. In recent weeks we have seen the numbers of infected people increase rapidly again in various countries, so caution is still required."


The group's transformation plan, announced in November 2020, remains 'on track', however, with the group planning to optimise its organisational structure, invest more in sustainability, and reduce costs in the short- to medium-term.

By the end of this year, 1,000 jobs at at the firm will be discontinued, meaning that from the start of 2022, costs are expected to be around €100 million lower per year.

FrieslandCampina is also in the process of disposing non-core businesses, with the group recently announcing a strategic partner for its animal feed business, Nutrifeed, as well as offloading its Russian consumer actives to Ehrmann.

'For the second half of 2021, FrieslandCampina expects a continuation of the situation in the second quarter,' the group said. 'On the one hand, FrieslandCampina is cautiously optimistic about the recovery of the consumer and out-of-home channels that has set in; on the other hand, the Asian infant nutrition market is not expected to recover.'

© 2021 European Supermarket Magazine. Article by Stephen Wynne-Jones. For more Fresh Produce news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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