Historically high milk prices boosted FrieslandCampina‘s revenue and profit last year, but the dairy producer warns that this year will be a lot tougher.
FrieslandCampina saw its net revenue rise by 22.4 % to 14.1 billion euros, a strong growth that can be attributed to price increases. Although the consumer dairy division was unable to fully pass on cost increases to customers, this was “more than compensated” in the other divisions. As a result, operating profit rose 32.7 % to 471 million euros; net profit was even up 69.8 % to 292 million euros.
CEO Hein Schumacher points out that the dairy cooperative paid out a record amount of over 5.4 billion euros in compensation to member dairy farmers, thanks to the historically high milk prices. The amount of milk supplied did fall by 2.5 % though, due to a drop in the number of member dairy farms from 10,546 to 9,927.
Downward trend started
However, the Dutch dairy producer has signalled that those historically high milk prices have already come to an end in the fourth quarter of 2022 and that prices are falling again. FrieslandCampina expects that trend to continue this year, which will weigh down profitability. In addition, volumes may fall due to the reduced purchasing power of consumers in many markets.
This year, FrieslandCampina wants to focus more on product and brand innovation. Investment in research and development will increase, seeking to improve nutrition and introduce more sustainable production and packaging. Sustainability will also remain an important pillar, with a focus on reducing greenhouse gas emissions and developing sustainable packaging.