Dutch dairy giant FrieslandCampina has posted a 4.6% drop in revenues to €11.6 billion (2017: €12.1 billion) for its financial year 2018.
Operating profit was down 23% to €342 million from €444 million in 2017.
The Factors
Among other reasons, this decline has been attributed to a loss of over €100 million incurred by FrieslandCampina due to the payment of very low basic dairy prices to the farmers.
Investments in innovation, marketing, sales, and distribution also had an impact on its performance in Asia, the company said.
Costs related to organisational restructuring and the closures of production facilities amounted to €50 million.
Cash flow from operating activities increased by €201 million to €619 million due to improved working capital.
Organisational Transformation
Commenting on the results, chief executive, Hein Schumacher, described FY 2018 as "a year of transformation", where FrieslandCampina introduced a "new organisational structure" and implemented new strategies.
Schumacher added, "We want to lead with sustainability and show this, among other things, by being the first dairy company to market dairy with an independent ‘On the way to PlanetProof’ quality mark."
The second half of 2018, the dairy company witnessed a volume growth of 2.3% compared to the first half.
The company completed four acquisitions in the second quarter, and signed a partnership agreement for the production of mozzarella.
Its consumer dairy business witnessed an improved growth in volume, particularly in Asia.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.
