Dutch dairy giant FrieslandCampina has reported 19.4% year-on-year growth in revenue to €6.6 billion in the first half of its financial year, driven by price increases, higher commodity dairy prices, and the recovery of European out-of-home markets.
Operating profit increased from €130 million to €328 million, the dairy giant added.
Net profit in the first six months increased by 124.2% year-on-year to €139 million due to higher commodity dairy prices and the recovery in its infant nutrition unit.
The company noted that its profit margins in the retail channel came under pressure due to cost increases.
Commenting on the company’s performance, Hein Schumacher, CEO of Royal FrieslandCampina N.V., said, “The figures show that there was good revenue and profit growth in the first half of the year. Revenue and profit from infant nutrition in China experienced significant growth, in part due to the strong growth of Friso Prestige.
“However, costs also rapidly increased across the board, making price increases inevitable. Our Professional and Trading businesses benefitted from high fat, protein, and commodity dairy prices. Profit margins, particularly in the retail channel, were under pressure because it was not possible to fully pass on cost increases. The historically high milk price in the first half of the year of course is favourable for our member dairy farmers since they too are confronted with significantly increased costs in their farming operations.”
Pro Forma Milk Price
In the first half, the pro forma milk price for member dairy farmers increased by 37.8% to €51.33 per 100 kilos of milk, while the pro forma performance price increased by 39.8% to €52.63 per 100 kilos of milk.
The dairy cooperative will forego interim pro forma supplementary cash payments to member dairy farmers as the outlook for the second half of 2022 is uncertain.
“The end of all uncertainties is not yet in sight. We are still faced with inflation-related challenges and the associated price increases, mounting raw material shortages, declining consumer confidence and the corona pandemic, which has yet to completely pass,” Schumacher added.