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FrieslandCampina's FY 2023 Performance Dented By Market Conditions, Restructuring Costs

By Dayeeta Das
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FrieslandCampina's FY 2023 Performance Dented By Market Conditions, Restructuring Costs

Dutch dairy giant FrieslandCampina saw a 'difficult' 2023 with its annual results impacted by unfavourable market conditions and one-off restructuring costs.

FrieslandCampina reported a 7.1% decline in revenue in its full-year 2023 to €13.1 billion from €14.1 billion in the previous financial year.

The company attributed this decline to unfavourable currency translation effects, sale of a part of its German consumer activities, and declining volumes in consumer markets, in particular, due to high inflation.

Operating profit for the financial year declined 84.1% to €75 million, from €471 million in 2022.

FrieslandCampina added that it invested €568 million in advertising and promotions in 2023, compared to €601 million in 2022.

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One-off restructuring costs for the implementation of its Expedition 2030 strategy amounted to €136 million, while other one-off costs and higher financing charges resulted in a negative net result of €149 million.

'Disappointing Results'

Jan Derck van Karnebeek, CEO Royal FrieslandCampina N.V. stated, “2023 was a difficult year for FrieslandCampina. Business results, particularly with respect to our global consumer dairy and trading activities, were severely under pressure. By contrast, the specialised nutrition and ingredients business groups had a good year, although this was insufficient to compensate for the disappointing results of the other two business groups.

“The disappointing operating profit, combined with one-off costs and higher financing charges, resulted in a negative net result for 2023. As a result, we are not providing a supplementary cash payment to our member dairy farmers. This is disappointing, all the more so given the increased costs for our members and costs for efforts to further increase sustainability at farms.”

Annual Highlights

In 2023, the total volume of supplied member milk decreased by 1.4% year on year to 9,369 million kilogrammes, due to a decrease in the number of member dairy farms, from 9,927 to 9,417.

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The milk price received by FrieslandCampina's member dairy farmers last year was €48.08 per 100 kilogrammes of milk, down 16.2% compared with 2022, when it paid €57.35 per 100 kilogrammes of milk.

The dairy giant saw a 9.4% decline in greenhouse gas emissions from production and milk transport during the year.

Outlook 2024

FrieslandCampina expects milk production to continue to be under pressure in key dairy exporting regions in 2024.

It expects an increase in the costs for raw materials, packaging materials and transportation due to conflicts and geopolitical instability in various parts of the world.

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