A good year for Friesland Campina with historically-high milk price

Dutch dairy giant Friesland Campina reported a full financial year revenue increase of 10.8 per cent to €11.4bn boosted by volume growth and higher prices.

According to the company, the improved result was due primarily to volume growth in the three strategic growth categories (infant nutrition, dairy-based beverages and branded cheese), the passing on of the higher guaranteed price, far-reaching efficiency improvements in production and cost control in the European operating companies.

Cees ’t Hart, CEO Royal FrieslandCampina noted its profit amounted to €157m. “Our profit was adversely affected by a goodwill impairment and negative currency translation effects in the second half of the year. Without this goodwill impairment profit would have risen by 17.6 percent to €327m,” he said.

The CEO continued: “We are ahead of schedule with our Route 2020 strategy. At the same time we are continuing to improve our processes and will pay even closer attention to costs. We will also continue investing in the renewal and expansion of our milk processing capacity so as to ensure that we can continue processing all the milk supplied by our members, now and after the withdrawal of the milk quota in 2015, into dairy products for which there is a demand elsewhere in the world. All in all we have invested €1.8bn during the past five years.”

Among key developments in 2013 was the opening of new FrieslandCampina Innovation Centre in Wageningen by Queen Máxima and its acquisition of a 7.5 per cent interest in Synlait Milk Ltd in New Zealand.

It terms of its outlook for 2014, the dairy giant said it is remaining cautious.

“2013 proved how difficult it is to predict what the dairy market will do. The rapid rise in the listed prices for commodities and the persistently high price level throughout the year took producers and customers around the world by surprise. Friesland Campina is, therefore, remaining cautious in its forecasts and is not making any predictions regarding the expected results for 2014,” it said.

In 2014 Friesland Campina said it anticipates achieving further growth with infant nutrition and dairy-based beverages in Asia and Africa and has taken increasing competition from local suppliers of dairy products into account.

“The worldwide offering of milk is expected to increase slightly in 2014,” it noted. “Weather conditions and the availability of dairy cattle remain the key factors for milk production. New Zealand is expected to produce more milk, but production in North and South America is expected to continue lagging behind. In the European Union growth is expected to be below the available quota set in the previous milk quota year (2014 – 2015). In the Netherlands, Denmark and Germany milk production will probably increase further in advance of the ending of the milk quota in 2015.”

 

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