News Milk
FrieslandCampina intervenes: another major reorganization
FrieslandCampina is going to cut costs significantly. To increase its disappointing profitability, the cooperative dairy group wants to save €2026 to €400 million in costs annually from 500. The austerity plan with the name 'Expedition 2030' is intended to remain attractive to member dairy farmers.
In short, FrieslandCampina's costs are considerably too high in relation to turnover. This came up painfully in mid-July disappointing half-year figures. With a meager net profit margin of 0,11%, FrieslandCampina barely made a profit in the first half of 2023. Newly appointed CEO Jan Derck van Karnebeek called these figures unworthy of FrieslandCampina. The poor half-year figures were probably somewhat flattering. After all, the dairy market collapsed last winter and the milk price responds with a delay of two to three months. Other dairy companies also paid too much milk money in relation to the market.
€400 to €500 million
Apart from that, Van Karnebeek wants to sail more closely to the wind shortly after taking office in order to increase profitability. The announcement is striking in some ways, because the previous reorganization has only just been completed. The structure was then simplified to four business units, which has now become seven again. This does not immediately make the organization more transparent, but the effectiveness of each business unit may improve. Moreover, the performance of the least performing business units will then be exposed more quickly, which is probably the idea of Van Karnebeek and the other directors.
"I am convinced that the combination of a competitive production chain and lower overhead costs will strengthen our position as a leading player in the dairy industry. This is important for FrieslandCampina to remain attractive to its member dairy farmers, employees and customers. Now and in the future ", reads the CEO's statement, which hints at cost savings of €400 to €500 million from 2026. The first step should be taken in 2024, provided the Members' Council agrees to the plan.
Many jobs at risk
Factory closures are not part of the proposed austerity package. Logically, jobs will be lost, although exactly how many have not been announced. However, support functions in particular are disappearing. During the previous round of layoffs, 1.000 jobs disappeared, resulting in €100 million in savings, or at least that was what had been calculated in advance. There may now be many more. Among all the savings measures, FrieslandCampina has also announced that it will invest in the factory in Borculo. There, the production capacity of whey protein isolates is being doubled to respond to the growing sports and infant nutrition market.
Wouter Job
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