FrieslandCampina has become the fourth company – following Glanbia, Frutarom and Symrise – to report record financial results.The company’s profit increased by 26.9% to €274 million, with net revenue up by 7.1% to €10.3 billion which FrieslandCampina attributed to a shift in volume from commodities and basis products to growth categories (infant & toddler nutrition, dairy-based beverages and branded cheeses), acquisitions and currency translation effects.
”FrieslandCampina can look back on a good year,” said Cees ’t Hart, CEO Royal FrieslandCampina . “The route2020 strategy has delivered results faster than expected. The focus is on the future. Every year the Company invests around 400 to 500 million euro. Much of the investment is to achieve growth so that the expected increased quantity of member milk can be processed.
The Company is financing this production capacity expansion with its own means. Most of the investments are taking place in the Netherlands and, in particularly, in the area of expanding the production capacity of infant & toddler nutrition – the segment in which the most robust growth is being achieved by responding to the increasing demand from Asia for high-quality dairy products.”
The Ingredients business group performed well in 2012, said Friesland Campina. Revenue from third parties rose by 10.9% to €1,677 million due to higher volumes and sales prices. The continuing high demand for dairy ingredients for infant and toddler nutrition had a positive effect on the volumes. Operating profit rose by 11.4%.
The 10.2% volume growth of infant and toddler nutrition and the 9.5% volume growth of dairy-based beverages outside of Europe were described by the company as positive. The branded cheeses category achieved a volume growth of 4.4% through increased export. The volume of dairy-based beverages in Europe and commodities dropped.
The sales prices of the majority of the products rose. The sales prices of butter and milk powder fell by 10.7%, which meant the average sales price dropped.
The acquisition of dairy company Alaska Milk Corporation in the Philippines and of IDB Belgium contributed €237 million towards the revenue growth.
In Europe, reduced consumer spending as a result of the economic crisis in many European countries put pressure on volumes and revenue. Sales prices in Europe have remained under the 2010 level due to the economic crisis.
Operating profit rose, said the company, because, unlike in 2011, more of the increases in raw material and packaging could be passed on in the sales prices. However, in the Cheese, Butter & Milkpowder business group the sales prices for butter and milk powder were considerably lower due to the low world market prices for these products.
Looking forward, FrieslandCampina said that the economic outlook is challenging. For 2013 a slight rise of the demand for dairy is expected due to the increasing consumption at a global level, particularly in Asia, South America, Russia and Africa. In western countries the demand for dairy products has, to a degree, stagnated due to the negative economic developments and lagging consumer spending power.
The company declined to make any statement concerning its expected financial performance.
