FrieslandCampina and Arla earn more with less

However, Arla also remains cautious about all the news about rapidly rising dairy prices. The company fears that consumers and retailers will have difficulty following the large steps upwards that the dairy market is now taking.

Convert down
Both Arla and FrieslandCampina saw their turnover decrease compared to the first half of 2023; FrieslandCampina by around €370 million, Arla by roughly €500 million. The turnover of the former amounted to €6.433 million, that of the latter to €6,6 billion. However, both also saw their profit increase. At FrieslandCampina it went up from €8 million to €183 million. At Arla it increased from €103 million to €167 million.

The milk price started to rise again, although at FrieslandCampina it was still clearly lower than in the first half of last year. Corrected for deviating fat and protein contents, both cooperatives paid a roughly comparable milk price in the first half of this year.

Of course, there are differences. Arla is more dependent on retail in Europe for the sales of its products. Moreover, branded products are a more important spearhead for Arla. The company saw retail sales decline further, but at the same time signaled a recovery of branded product sales. According to Arla, the trend was reversed because the purchasing power of most European consumers has improved. On average, 4,1% more Arla brand was sold, but in the Benelux and France up to almost 15% more.

Cheese business
Cheese is not such a big deal at Arla, although this company also sees an increasing demand for Gouda foil cheese, a product that is very important to FrieslandCampina, but not necessarily under a brand. FrieslandCampina saw a strong recovery in cheese. The Dutch dairy giant also has to rely more on the sales of dairy products outside Europe, and is noticing this strongly. FrieslandCampina is also profiting very well from the sales of ultra-premium infant nutrition in China. That is something that Arla does not have. At both companies, the ingredients division is and will continue to make an important contribution to the profit, but turnover and profit declined at both companies.

Arla is and remains the company with the largest and most stable milk supply. In the first half of 2024, around 7 billion kilos of milk were supplied, almost the same as in the first half of 2023. FrieslandCampina, on the other hand, lost around 3% of milk and still had a supply of 4,7 billion kilos. Since both companies are almost the same size in terms of turnover, it is easy to calculate that FrieslandCampina added the most value to the milk and, given the profits, also the most margin in the past half year.

Difference in back payment
However, this is still an interim balance, in which FrieslandCampina also benefits from the major clean-up that CEO Derck Jan van Karnebeek had carried out in the books of the Amersfoort-based company almost immediately after taking office. Now it is important to maintain the positive developments. As a precaution, the company is therefore not yet paying a partial back payment for the first half year, while Arla continues to pay out strictly according to schedule, at least 1,5% back payment, possibly more. FrieslandCampina must also ensure that its equity does not decrease further. At Arla, this has already been guaranteed.