Dutch dairy giant FrieslandCampina has reported an increase in operating profit to €301 million in the first half of 2024, from €47 million in the corresponding period last year.
This 'significant' increase was driven by improvement in volume mix, less expensive inventories, smaller differences between commodity dairy prices and the guaranteed price, and cost-saving measures implemented by the company.
Despite the good performance of value-added products, revenue in the first half decreased by 6.7% year on year to €6.4 billion due to lower milk prices and currency translation effects.
Net result for the period increased to €183 million from €8 million in the first half of 2023, the company added.
The dairy group achieved cost savings of €152 million in this period as a result of the implementation of its Expedition 2030 strategy.
'A Strong Start'
Jan Derck van Karnebeek, CEO of Royal FrieslandCampina N.V., stated, “In the first half of 2024, we have worked hard on improving our results on the basis of the Expedition 2030 strategy that we launched at the end of 2023.
“Starting this year, FrieslandCampina is focusing on specific product/market combinations with its seven business groups. Collectively, these business groups have the task of optimally valorising the milk of our member dairy farmers. [...]. We are seeing that the changes that we have implemented since the end of 2023 have led to a strong start in 2024.”
First-Half Highlights
The cash flow in the first half amounted to €397 million, up from €90 million in the same period last year.
Working capital increased due to changes in volume mix and the low level at year-end 2023, FrieslandCampina noted.
The cooperative processed approximately 4.7 billion kilograms of milk from dairy farmer members in the first six months of 2024, witnessing a year-on-year decline of 3.2%.
FrieslandCampina attributed this decline in milk supply to member dairy farmers who opted for the Exit Scheme, which was a condition set by the European Commission for approving the merger between Friesland Foods and Campina, which closed on 9 November 2023.
Outlook
The dairy cooperative expects to face continued economic uncertainties in the second half of the year, similar to those experienced in the first half.
Prices for commodity dairy products remain volatile and inflation is expected to rise, it noted.
It will increase its marketing efforts in the second half to consolidate its market position and continue with the optimisation of production processes and milk processing capacity under the Expedition 2030 strategy.
