Dairy giant FrieslandCampina has reported a 3.2% increase in revenue in its 2021 financial year, however CEO Hein Schumacher has cited inflation and price increases as "key challenges" facing the business over the coming year.
The group reported full-year revenue of €11.5 billion, which is up 4.3% if adjusted for currency effects.
The revenue gain was largely driven by price increases and higher commodity dairy prices, as well as the 'cautious recovery' of out-of-home markets in Europe, the group said.
'Sharp Increase' In Raw Material Costs
The group noted that 'sharply increased' raw material costs necessitated price increases, which in turn benefited group trading.
Operating profit increased by 32.5% to €355 million, however if adjusted for currency effects, other income and expenses, it was down 1.6% to €380 million.
“The year in which we celebrated our 150th anniversary, the result, and therefore the subsequent cash payment to members, still fell short of our objectives," Schumacher said.
"However, we did make excellent progress in strengthening the company’s foundation. Cost saving measures were effectively implemented and completed ahead of schedule. Excellent results were obtained across the entire line in relation to sustainability. The adopted new member financing has strengthened the company’s equity. "
Schumacher, who was recently reappointed as the group's CEO, noted, however, that the group's infant nutrition business was "under severe pressure" during the year, with the overall market declining due to a decrease in the birth rate in the Asian market.
At the same time, this was offset by 'sharp growth' in revenue at its FrieslandCampina Professional business, particularly in the second half of the year, the company added.
Looking ahead to the coming year, Schumacher said, "For 2022, inflation and price increases are the key challenges in terms of keeping the result up to par. We are cautiously optimistic about the recovery of the Professional market, as well as continued high commodity dairy prices.
"Combined with a slightly improved market for infant nutrition, we expect an increase in revenue of two to four percent with constant margins in comparison to 2021 for the year as a whole.”