News milk
FrieslandCampina recovers, but does not pay out
FrieslandCampina shows a strongly improved result for the first half of 2024. The operating result increased compared to a year earlier by €254 million, the half-year profit increased by €175 million. According to the company, this has laid a good foundation for a cash supplementary payment at the end of this year, but no interim payment will be made yet.
CEO Jan Derck van Karnebeek cites the volatility on the world dairy market and economic uncertainties as the reason for this. According to him, the operating result improved significantly due to improvements in the volume mix, positive developments in consumer brands in Southeast Asia and the Friso infant nutrition brand in China. In addition, the elimination of the impact of expensive inventories plays a role, as do other lower costs. "This is good news for our member dairy farmers and employees. Large, new production locations have also been opened in Malaysia and Indonesia to meet future market demand in the region."
Despite all the good news, net turnover fell by 6,7% to €6,4 billion. This was mainly due to a lower milk price and currency effects. Before currency effects, the sales decline was 2,9%
Less milk processed
FrieslandCampina also saw a decline in milk supply. The company processed approximately 4,7 billion kilos of member milk through the end of June, a decrease of 3,2% compared to the same period last year. This decline can largely be attributed to the departure of the last group of member dairy farmers who took advantage of the severance scheme that was in place due to the merger between Friesland Foods and Campina in 2009 and which ended on November 9, 2023.
An interim payment could be paid based on the results for the first six months. An amount of €61 million has been built up for this purpose. However, due to all the uncertainties, it has been decided to err on the side of caution and not pay out anything now.
Outlook uncertain
FrieslandCampina also expects to be confronted with economic uncertainties in the second half of the year, as occurred in the first half of the year. Prices for basic dairy products remain volatile and inflation is expected to increase. Given all the circumstances, the company does not issue a result forecast for the second half of the year.
Klaas van der Horst
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
