Top FrieslandCampina struggles to follow the market

It is understandable that management points to bright spots, such as a high milk price and good earnings at various business groups, but top management is not happy. FrieslandCampina has had few real successes in recent years.

Added value is a moving target
Added value has been the company's main goal for years, but in recent years it has become clear that added value is not always in the same place and that it is therefore not always achieved with branded products or with more intensively processed products. Most of it was earned in bulk in the past year.

Fortunately for FrieslandCampina, it has also benefited from this, through cheese, butter and powders. At the same time, FrieslandCampina has also continued to dispose of powder towers, as previously in Aalter in Belgium and recently in Leeuwarden.

Carbon footprint versus powder production
The dairy company also said goodbye (again) to the production of fat-filled milk powder. The reason given for disposing of the towers is to reduce the (CO2) footprint. In the meantime, competitors are doing good business with milk powders, sometimes thanks to old FrieslandCampina towers.

The Amersfoort dairy giant is mainly trying to earn more money with branded products, ingredients, and also with infant nutrition. However, sales of branded products appear to be coming under increasing pressure, because consumers have to pay more and more attention to their budgets. This is not only the case in Africa and Asia, but also in European supermarkets. B or C label products often offer more value for money. So is FrieslandCampina still on time? And the divestment of the German consumer activities, including the once top brand Landliebe, to Müller proves that brands are not always synonymous with more profit.

Rejected the last bit of Huishan
The company also cites the improved performance of premium infant nutrition in China as one of the reasons for continuing these activities. Not so long ago, the Chinese infant nutrition market was declared almost dead, but now FrieslandCampina is seeing light again. However, things are not improving yet with child nutrition. The half-year report states that the infant nutrition business is still under pressure in many Asian markets. In addition, the child nutrition factory in Xiushui, built in 2015, is a remnant of FrieslandCampina Huishan, just sold to competitor Yili. It is not clear whether this will also result in additional depreciation. In any case, part of the loss has already been taken earlier. It is certain that the various company closures and sales in the first half of the year resulted in almost €100 million in impairments.

Which eggs in which baskets
It is not entirely clear from the message in which baskets FrieslandCampina wants to lay its eggs in the coming years. Sometimes the company itself doesn't seem to really know either. "FrieslandCampina is increasingly profiling itself as a food company with a strong core in dairy," the management report states. So no more full-blood dairy company. More and more plant-based products are available.

Yet dairy remains the core. FrieslandCampina is increasingly concerned about the milk supply. It fell sharply over the past six months.

Above average company is leaving
Apparently the last press releaset of the Dutch Milk Foundation (DMF), 284 members left in the past reporting year, taking with them a departure bonus of €5,00 per 100 kilos of milk (and possibly a few more without a bonus). In addition, €60 to €70 million in member assets (from bonds) also disappeared in the past six months, some of which probably together with those who resigned. The signs indicate that the exodus of members has not stopped yet, and they are all taking an above-average volume of milk with them (more than 1,1 million kilos). FrieslandCampina, on the other hand, hopes to gain new members, especially in Belgium and Germany. The outflow is still stronger for the time being.