FrieslandCampina reports 6.7% revenue decline

NETHERLANDS – FrieslandCampina, a Dutch dairy cooperative, has reported a 6.7% decrease in revenue in the first half of 2024, mainly due to lower milk prices and currency fluctuations.

However, despite these challenges, the company reported growth in other areas, reflecting a strong performance in value-added products, although its milk business faced difficulties.

The average milk price dropped by 3.1% to €50.09 per 100 kilograms, compared to €51.70 in the first half of 2023. However, net results increased significantly to €183 million, up from €8 million in the same period of 2023. Operating profit also soared from €47 million to €301 million.

This positive shift was attributed to improvements in product mix, reduced inventory costs, and more minor price differences between commodity dairy prices and the guaranteed price.

The company achieved €152 million in savings through its “Expedition 2030” reorganization plan, which focuses on restructuring operations to enhance efficiency.

Jan Derck van Karnebeek, CEO of Royal FrieslandCampina, expressed satisfaction with the company’s progress in 2024 despite some setbacks.

He highlighted the importance of the “Expedition 2030” strategy launched at the end of 2023, highlighting that the strategy emphasizes specific product and market combinations across seven business groups, aiming to optimize the value of milk from member dairy farmers.

“The goal we have set for ourselves is to improve our performance based on the three dimensions of our performance triangle: “winning in the market, expanding our margin, and generating cash.” We have achieved good progress on all of these dimensions,” he noted.

However, due to uncertainties in future milk supply, maintaining scale in milk volume has remained crucial for the company. FrieslandCampina processed 3.2% less milk in the first half of 2024 than last year, handling about 4.7 billion kilograms of member milk.

The decline in milk processing was partly due to the Exit Scheme, a condition of the European Commission’s approval of the merger between Friesland Foods and Campina, which concluded in November 2023.

This scheme allowed member dairy farmers to exit the cooperative, impacting overall milk volume.

According to reports, last year, it remained challenging for FrieslandCampina, with revenue declines caused by adverse market conditions, including a shrinking consumer market and high inflation.

In response, the company announced plans in late 2023 to cut 1,800 jobs globally as part of a major cost-saving initiative.

Despite these hurdles, FrieslandCampina’s reorganization efforts, strategic focus on value-added products, and operational efficiency pave the way for improved financial performance.

The company continues to adapt to market conditions and aims to strengthen its position in the competitive dairy industry while ensuring sustainable growth.