Friesland Campina has reported an operating profit of €314m for the first half of the year – an increase of more than 80% compared with the same period last year. On a constant currency basis, half-year operating profit increased nearly 70% to €291m.

Friesland said the substantial improvement in the group’s operating profit is a result of an increase in operating margins to 5.6%, lower milk and non-milk related raw material costs, a better sales mix and favourable currency translations.

Revenues for the six months to the end of June were relatively flat at €5.6bn, although in constant currency terms revenues declined slightly by 4.3% to €5.4bn. Profit for the period increased by a staggering 85% to €192m as a result of increased sales of products with higher added-value, favourable currency tailwinds to the tune of €17m and the lower cost of procuring raw milk.

Interim bonus

Friesland’s total milk supply increased year-on-year by 1.8% to just under 4.8bn litres for the six-month period. However, the group’s guaranteed milk price for farmer suppliers for the first half of 2015 stood at €36.48/100kg (37.57c/litre), a decline of over 17% compared with 2014.

As a result of the improved performance of the business so far this year, Friesland announced it will give member suppliers an interim payout of €2.02 for every 100kg (€0.02 per litre) of milk supplied in the year to date.

With over 19,000 farmers supplying an average of 250,000 litres so far this year, dairy farmer suppliers to Friesland can expect an interim bonus of €5,200 on average.

Commenting on the results, Friesland chief executive Roelof Joosten said the business had achieved a good result despite the uncertainty of the markets at present.

“Thanks to our strong market positions and cost reductions we have managed to compensate the drop in the guaranteed milk price for the member dairy farmers,” added Joosten.

Friesland declined to make a comment on its expected result for the rest of the year due to the ongoing uncertainty in global dairy markets. It added that global milk supply is to increase slightly in the second half of the year whereas demand will continue to be sluggish as a result of the ongoing Russian trade embargo coupled with a lagging appetite for dairy commodities from China.