FrieslandCampina faces revenue drop in 2023

NETHERLANDS – Multinational dairy cooperative, FrieslandCampina, has reported a challenging financial year in 2023, with revenues plummeting by 7% to €13 billion (US$14 billion) compared to 2022.

The company attributed the decline to unfavorable market conditions, including currency translation effects, the sale of German consumer activities, a shrinking consumer market, and high inflation.

Jan Derck van Karnebeek, CEO of Royal FrieslandCampina, expressed the difficulties faced in 2023, highlighting the severe pressure on business results, especially in global consumer dairy and trading activities.

“Despite the struggles, specialized nutrition and ingredients business groups performed well, although not enough to offset the overall disappointing results.”

The operating profit for 2023 saw an 84% decrease, dropping to €75 million (US$81 million) from €471 million (US$508 million) in 2022.

Factors such as the discrepancy between guaranteed milk prices for members and market prices for commodity dairy products, the sale of expensive stock in a low-price market, and unfavorable currency translation contributed to the challenging financial performance.

Due to the negative net result in 2023, FrieslandCampina announced the absence of supplementary cash payments to its member dairy farmers, citing increased costs and efforts to enhance sustainability on farms.

The operating cash flow, however, showed improvement, reaching €831 million (US$896 million) due to enhanced working capital.

To address the disappointing results, the company initiated a transformation initiative named Expedition 2030 in the second half of 2023, aimed at reshaping FrieslandCampina into a leading dairy company.

Despite the challenging circumstances, FrieslandCampina Professional strengthened its market position, with its specialized nutrition business group making strides in the Chinese infant nutrition market, ranking fourth with the Friso brand.

FrieslandCampina’s Ingredients business group reported successful sales in adult nutrition proteins and ingredients, along with the expansion of whey protein isolate and Milk Fat Globule Membrane (MFGM) production capacity at its Borculo production facility in the Netherlands.

The 2023 revenue was impacted by a one-off restructuring cost of €136 million (US$147 million) for the implementation of the Expedition 2030 strategy.

This, along with other one-offs and higher financing charges, resulted in a negative net result of €149 million (US$161 million).

Despite the financial challenges, FrieslandCampina highlighted its sustainability achievements in 2023, including a 9% decrease in greenhouse gas emissions compared to 2022.

The company implemented the Foqus Planet sustainable development methodology, rewarding dairy farmers for reducing greenhouse gas emissions on their farms.

FrieslandCampina acknowledges the need for global cost reductions and announced the elimination of 1,800 jobs over the next two years.

“We remain committed to sustainability, aiming for a more sustainable dairy chain while continuing to serve its member dairy farmers, employees, customers, and consumers worldwide.”

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