FDBusiness.com

Royal FrieslandCampina has increased profit in 2012 by 26.9% to Eur274 million and revenue by 7.1% to a record Eur10.31 billion, as the dairy co-operative continued to benefit from a shift in sales volumes from commodities into higher value products in the growth categories of infant and toddler nutrition, dairy-based beverages and branded cheese.

For instance, FrieslandCampina reported a 10.2% volume growth in infant and toddler nutrition and a 9.5% volume growth of dairy-based beverages outside ofEurope. The branded cheeses category achieved a volume growth of 4.4% through increased exports but the volume of dairy-based beverages in Europe and commodities dropped.

Acquisitions and currency translation effects also helped boost revenue. The acquisition of dairy company Alaska Milk Corporation in the Philippines and of IDB Belgium contributed Eur237 million towards the revenue growth. Currency translation effects had a positive effect on revenue of 1.4% (Eur139 million).

2012 operating profit grew by 19.6% to Eur482 million, reflecting improved results from the Consumer Products International, Ingredients and Consumer Products Europe business groups. Operating profit rose because, unlike in 2011, more of the increases in raw material and packaging could be passed on in the sales prices. Far-reaching efficiency improvements in production and cost management by the European operating companies also contributed towards the increased profit. However, the economic situation in Europe continues to exert pressure on volumes and margins.

In 2012, FrieslandCampina took further major steps towards achieving its route2020 development strategy aimed at growth and value-creation in selected markets and product categories in order to improve the position of the co-operative’s member dairy farmers.

For example, during 2012, FrieslandCampina invested Eur423 million primarily in capacity expansion for infant and toddler nutrition and milk processing. Sales activities in the Netherlands were integrated into a single organisation during the year as were the export activities of FrieslandCampina Cheese Specialities. FrieslandCampina also commenced reorganization programmes in Germany and Hungary to improve its competitive position.

Cees ’t Hart, chief executive of Royal FrieslandCampina, comments: ”FrieslandCampina can look back on a good year. 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.”

He continues: “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.”