Sales Rise as FrieslandCampina Invests in Further Growth
Benefiting from higher prices and increased volumes of added value products, FrieslandCampina has increased net revenue by 9.3% to Eur4.73 billion for the first half of 2011. However, operating profit decreased by 11.8% to Eur210 million as the margin dropped to 4.4% compared to 5.5% in the first half of 2010. The decline in profit was due to pressure on margins inEurope, investments in the organisation to deliver the group’s route2020 development strategy and negative currency translation factors.
First half profit amounted to Eur127 million against Eur156 million in the first half of 2010 as the group paid higher milk prices to its members – the pro forma milk price rose by 19.3% to Eur38.63 per 100 kilos of milk.
Cees ’t Hart, chief executive of FrieslandCampina.
Cees ’t Hart, chief executive of FrieslandCampina, comments: “The developments were in line with expectations. We achieved growth in all four business groups and especially in Consumer Products International and Ingredients. We are on schedule with the adjustments in the organisation, the projects we have started and the new working method of marketing and innovation we have implemented in the context of the achievement of the route2020 strategy. In 2013-2014 we expect to see more visible results in the achievement of route2020.”
However, while the Dutch dairy group succeeded in passing on higher raw materials costs and increasing volumes in the majority of its international markets, Europe proved problematic. “In Europe we have had a more difficult time. There is no growth in consumption and consumers remain extremely susceptible to low prices and product promotion campaigns,” he says. “In Germany in particular the necessary price increases could not be passed on to the market. In the difficult European market we did succeed in increasing the market share of most brands or maintaining the market share at the same level as last year.”
FrieslandCampina’s route2020 strategy is aimed at growth and value creation in selected markets and product categories. To achieve the growth in the infant and toddler food segment, in 2011 a start was made on a Eur100 million investment programme in the Beilen and Bedum production facilities. Investments in Beilen will amount to Eur70 million and will cover the expansion of the mixing capacity, a new drying tower and a new infant food packaging assembly line. Investments in Bedum will amount to Eur30 million for expanding the drying and processing capacity for desalinated whey products, which are used as ingredients in infant and toddler food. All the investment must be completed in 2013.
