FrieslandCampina makes a 'liberated' leap

How did the company do that? The simple answer may be: with fewer people and higher sales prices. However, a little more is still needed. Considerable cost savings have been achieved internally, worth €315 million. This means that about two-thirds of the target set for 2024 and 2025 has already been achieved. In addition, a single way of working has been implemented. That also helps.

Fewer goals in 2025
Furthermore, all seven business groups work hard for an optimal result, without catching flies, says CEO Jan Derck van Karnebeek. "We have released the strengths already present in the company, and if everyone is well attuned to each other, you automatically score goals."

There were also all sorts of market conditions that were favourable. That is also the reason why Van Karnebeek expects slightly fewer goals for the current year. Fewer one-off windfalls are expected. The milk price that members receive will remain relatively high, but will the sales market cooperate again? There is a lot of unrest in the world, partly due to the threat of all kinds of import restrictions and tariffs. Higher import duties for Dutch dairy in the US will not affect FrieslandCampina very much, because only about 1% of sales consists of cheese sales in the US. However, the unrest caused by the threat of trade wars and the like is not good for doing business, Van Karnebeek believes.   

Hard discounters wrapped
On the positive side, almost all business groups achieved a positive result last year. In Europe and also on the difficult German market, sales growth was also achieved, even at 'hard discounters' such as Aldi and Lidl. In addition, sales were apparently helped slightly by the fact that FrieslandCampina did not pass on all price increases in the sales chain (the company refers to this as inflation corrections). So a small market share was bought (back). Nevertheless, this had a positive effect overall.  

Ingredients sold out
In China, FrieslandCampina benefits from its strong position in the infant nutrition market. It is said to be the largest foreign infant nutrition brand there with Friso, Van Karnebeek quotes others. It is also a premium brand and last year also benefited from the fact that more children were born. The Ingredients business group did so well that it was completely sold out for the high-quality products at the end of last year.

Not all is glorious
Not everything went smoothly, however. In Nigeria, the company is still struggling with runaway inflation, although sales are increasing again, while results in Pakistan also took a hit. Exchange rate fluctuations in general cost more than €300 million in sales. The company's equity is strengthening thanks to the €164 million free portion of net profit, but has not yet recovered from the €302 million depreciation that took place last year (negative dividend).

What was also not a nice development was that the number of member companies fell by 416 units last year and that the milk supply was 319 million kilos lower. Only 9 billion kilos came in. FrieslandCampina believes that this is also due to the moderate growing season and the effect of bluetongue, but other factors will also have played a role. 

Declining supply, new members
FrieslandCampina does not expect a further decline in milk supply for nothing. Van Karnbeek also hopes to attract new members thanks to the good results. Last year, 48 newcomers were welcomed, and the same number is said to be on the way. It helps that the €5 per 100 kilos entrance fee has been scrapped and only €100 per 8 kilos in delivery certificates are needed to enter. Moreover, the merger with Milcobel is expected at the end of this year.