Analysis milk
FrieslandCampina frees itself from German burden
As long as the sale of Friso was in the air, the sale of FrieslandCampina's German consumer activities to the Theo Müller Group proceeded so quickly. At least, as far as is known.
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The sale is not only fast, but also surprising, because FrieslandCampina did not want to hear anything about it before. FrieslandCampina had to maintain a strategic presence in the important German market, even if virtually nothing is earned, the previous managements argued. Now the button has been turned.
The sale of the German consumer activities yields less than what had to come in for Friso, but it also relieves FrieslandCampina of a major headache. A 'bleeder' is stopped and that is no less important than 'cash'. In addition, German milk consumption is falling.
Takeover amount
Nothing is reported about a takeover amount, but FrieslandCampina will not receive €1 billion for the sale of the German activities, as German media report. Last year, around €960 million was converted in Germany, but that concerned all FrieslandCampina's activities, including those of the ingredients division and 50% subsidiary DFE Pharma. The sale of cheese, Valess and Chocomel also remains outside the deal. FrieslandCampina will retain a sales office for this.
So, on balance, perhaps about €200 to €300 million in turnover will move to Theo Müller. With three factories and hundreds of employees, but certainly in the current market conditions these are almost certainly not very profitable or even loss-making activities. Almost all dairies that rely heavily on supermarket sales struggle to make money from it. That was different in the corona era, but that situation has changed radically since the beginning of this year.
German member milk first to Müller
The German members of FrieslandCampina are also excluded from the transaction. Logical, because they are co-owners of the cooperative and therefore cannot be evicted. Last year they produced about 450 million kilos of milk. That product will remain available for Müller for the time being, it has been agreed. It is expected until at least 2023, says a FrieslandCampina spokesperson.
Before that, a 'sustainable solution', as it is called, is still being sought. The milk may go to FrieslandCampina factories in Borculo or Veghel, for example. Wage production is another option, but there are plenty of other options as well. In the current market conditions, milk is no longer a burden, provided it does not have to be processed loss-making.