FrieslandCampina Suffers Net Loss Due to COVID-19 and Currency Effects

FrieslandCampina, the Dutch dairy cooperative, has reported a net loss of EUR 149 million for 2023, compared to a net profit of EUR 292 million in 2022. The company blamed the COVID-19 pandemic, the currency fluctuations, and the low dairy prices for its poor performance. The company also announced a higher than expected dividend for its farmer owners, and a new strategy to improve its efficiency and sustainability.

FrieslandCampina Reports Flat Revenue and Lower Operating Profit for 2023

FrieslandCampina reported its 2023 results on February 20, 2024, and said that its revenue was EUR 13.1 billion, almost the same as its 2022 revenue of EUR 13.2 billion. The company said that its revenue was affected by negative currency effects, mainly on SEK, GBP, and USD, as well as the deflation and volatility in the global dairy market.

The company also said that its operating profit was EUR 75 million, down from EUR 472 million in 2022. The company attributed its lower operating profit to the COVID-19 pandemic, which reduced the demand for its products, especially in the foodservice and out-of-home channels. The company also said that it faced higher costs for raw materials, packaging, and logistics, as well as one-off restructuring costs.

The company said that its profit before tax was EUR 9 million, down from EUR 403 million in 2022. The company said that its profit before tax was impacted by higher financing charges, mainly due to the increase in interest rates and the depreciation of the euro against other currencies.

FrieslandCampina
FrieslandCampina

The company said that its net loss was EUR 149 million, compared to a net profit of EUR 292 million in 2022. The company said that its net loss was mainly due to the impairment of goodwill and other intangible assets, amounting to EUR 206 million, related to its cheese and butter business in Germany and its infant nutrition business in China.

FrieslandCampina Pays Higher Dividend and Launches New Strategy

FrieslandCampina said that it will pay a supplementary payment, including interest on contributed capital, to its farmer owners of 2.07 EUR-cent per kg of milk delivered, equaling EUR 270 million in total, well-above the level set in its retention policy. The company said that it decided to pay a higher dividend to support its farmer owners, who also faced challenges due to the COVID-19 pandemic and the environmental regulations.

The company also said that it has launched a new strategy, called Expedition 2030, to improve its performance and competitiveness. The company said that its new strategy is based on four pillars: growth, efficiency, sustainability, and innovation. The company said that it aims to grow its revenue by 2-4% per year, improve its operating profit margin to 3.5-4.5%, reduce its carbon emissions by 30% by 2030, and increase its innovation spending to 1.5% of revenue by 2026.

The company also said that it has reorganized its business structure, effective from January 1, 2024, into four business groups: Consumer Dairy, Specialised Nutrition, Ingredients, and Trading. The company said that the new structure will enable it to focus on its core markets and products, and to simplify its decision-making and processes.

The company also said that it has implemented a cost-saving programme, which will result in a reduction of 1,800 jobs worldwide, including 900 in the Netherlands. The company said that the programme will generate annual savings of EUR 300 million by 2026.

FrieslandCampina Sees Positive Signs for 2024

FrieslandCampina said that it expects a gradual recovery of the dairy market in 2024, as the COVID-19 pandemic subsides and the consumer demand improves. The company said that it expects a positive impact from its new strategy and its cost-saving programme, as well as from its innovation pipeline and its sustainability initiatives.

The company also said that it will continue to invest in its brands, its markets, and its products, and that it will pursue organic and inorganic growth opportunities. The company said that it will also strengthen its financial position and its balance sheet, and that it will maintain a prudent dividend policy.

FrieslandCampina is one of the world’s largest dairy cooperatives, owned by more than 17,000 farmers from the Netherlands, Germany, and Belgium. The company produces a wide range of dairy products, such as milk, cheese, butter, yogurt, and cream, under its own brands and private labels. The company also produces ingredients for the food industry, such as whey and milk powder.

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