Dairy Firm FrieslandCampina Sees Performance Impacted By Dairy Price Increases
Dairy giant FrieslandCampina has posted a 10.1% increase in revenue to €12.1 billion, boosted by higher sales prices and the acquisition of the Engro Foods in Pakistan.
Profits, however, fell by 37.3%, to €227 million, both as a result of a negative currency translation, and the write-off of assets in China and Germany. Restructuring costs also impact the company's full year profits.
'The higher milk price was largely offset by increased revenues, however insufficient to fully compensate increases in other raw material and packaging costs,' FrieslandCampina said in a statement. 'This put the margins, particularly in consumer activities, under pressure.'
The period saw a significant increase in raw material prices, with the milk price for member dairy farmers increasing by 24% to 40.01 euros per 100 kilos of milk.
A Challenging Year
"2017 was a challenging year for FrieslandCampina," commented Hein Schumacher, chief executive. "On the one hand, we have seen a positive increase in revenue and a significant increase in the milk price for our member dairy farmers. On the other hand, write-offs of assets in China and Germany, pressure on volume in Europe and restructuring charges reduced profit."
Schumacher noted that the company implemented changes to its organisational structure last year "that enable us to respond faster and with a greater focus to the demands of consumers and customers. This has created a new basis for growth."
As well as the inclusion of Engro Foods in Pakistan in its consolidated full-year figures (+2.1%), FrieslandCampina's revenue performance was also impacted by higher sales prices (+11%). Currency effects had a -1.8% impact on revenue.
'The increase in revenue is largely due to the increased cheese prices and higher prices for butter and fat-related products in the second half of the year,' the company said.
Last week, FrieslandCampina announced that it had taken full ownership of its Chinese subsidiary, Friesland Huishan Dairy (FHD), which was established as a joint venture in 2015.
Elsewhere, last November, the company instigated a 'reorientation' of its Germany operations, which saw the closure of a plant in Gütersloh.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.