FrieslandCampina posts higher 2015 profits due to lower purchasing costs

Dutch dairy giant – FrieslandCampina – has posted higher profits in 2015 compared to the year earlier, recent accounts published by the co-op show.

In 2015, the dairy processor’s operating profit rose by 17.8% to reach €576m, while net profits jumped by 13.2% to €343m.

According to the co-op, the rise in profitability occurred due to the sale of more added-value products in Asia and the increased sales of ingredients and infant formula.

The Dutch dairy processor also said that lower purchasing costs and currency translation effects had a positive impact on profitability.

The milk price paid to member dairy farmers dropped by 18.9% to 0.35c/kg, due to the lower guaranteed price for raw milk, it says.

The volume of milk supplied by member dairy farmers also increase by 6.4% to reach 10.1 billion kilograms.

FrieslandCampina also reported that the costs of goods sold during 2015 fell by 6.2% on the year before to sit at €9.265 billion.

The reduction in costs is mainly due to the lower guaranteed price for raw milk, cost-reduction across all business groups and improved purchasing conditions for raw materials and packaging materials, it says.

Roelof Joosten, CEO of FrieslandCampina said that 2015 was an exceptional year for the dairy sector and for FrieslandCampina.

“On April 1, 2015 the milk quota system for dairy farmers was abolished after 31 years. In an uncertain dairy market FrieslandCampina performed well.

This good result could, to some extent offset the reduction of the milk price for member dairy farmers.

Joosten also said that FrieslandCampina’s unique dairy chain underpins its activities.

“In recent years FrieslandCampina has performed well in a number of attractive market positions.

“The focus remains on sustainable growth of the most valuable product market combinations and product market combinations that absorb mainly member milk.

“At the same time we will continue to manage in a very cost-conscious way so that the means to achieve growth are available,” he said.