FrieslandCampina shows a significantly improved result for the first half of 2024. The operating result increased by €254 million compared to a year earlier, and the half-year profit increased by €175 million. According to the company, this sets a good foundation for a cash payment at the end of this year, but no interim payment will be made at this time.
CEO Jan Derck van Karnebeek cites the volatility in the global dairy market and economic uncertainties as reasons for this decision. He states that the operating result improved significantly due to enhancements in volume mix, positive developments with consumer brands in Southeast Asia, and the Friso infant nutrition brand in China. Additionally, the elimination of the impact of expensive inventories, along with other lower costs, contributed to the improvement. "This is good news for our dairy farmer members and employees. Large new production locations have also been opened in Malaysia and Indonesia to meet future market demand in the region," he added.
Despite all the positive news, net revenue still decreased by 6.7% to €6.4 billion. This was mainly attributed to a lower milk price and currency effects. Excluding currency effects, the revenue decline was 2.9%.
Less milk processed
FrieslandCampina also experienced a decrease in milk supply. The company processed approximately 4.7 billion kilograms of member milk until the end of June, a 3.2% decrease compared to the same period last year. This decline can largely be attributed to the departure of the last group of dairy farmer members who participated in the departure scheme following the merger between Friesland Foods and Campina in 2009, which ended on November 9, 2023.
Based on the results for the first half of the year, an interim payment could have been made. An amount of €61 million was set aside for this purpose. However, due to all uncertainties, it has been decided to prioritize caution and not make any payments at this time.
Uncertain Outlook
FrieslandCampina also anticipates facing economic uncertainties in the second half of the year, similar to those experienced in the first half. Prices for basic dairy products remain volatile, and inflation is expected to rise. Given the circumstances, the company is not providing a forecast for the second half of the year.
