Dutch dairy co-op FrieslandCampina has reported a double-digit fall in profits for its 2020 financial year.
The farmer-owned co-op reported a 38% decline in operating profits in 2020 to just under €270m, as operating profit margins narrowed to just 2.4%.
Pre-tax profits for 2020 were down 44% year on year to €238m. Friesland blamed the sharp fall in profits on difficult market conditions due to COVID-19, a once-off restructuring charge of €106m, as well as significant market challenges in Hong Kong.
The co-op said the closure of the border between Hong Kong and mainland China resulted in major disruption to its specialised nutrition (infant formula) division. The accounts show profits in FrieslandCampina’s specialised nutrition division plunged almost 40% as a result.
Overall, FrieslandCampina reported a 1% fall in sales to just over €11.1bn. While sales of consumer dairy (-3%) and specialised nutrition fell sharply (-7%), the co-op did see an increase in sales of dairy ingredients (+5%) and standard dairy commodities (+3%).
Strong operating cashflow allowed Friesland to reduce its net debt by almost 20% during the year to just under €880m. It said its milk supply intake from its 17,000 farmer suppliers was very steady last year at just over 9.7bn litres.
The co-op said it paid an average milk price of 36.8c/l in 2020, which was about 2c/l down on the previous year. Friesland did not pay a cash bonus to suppliers last year due to the sharp fall in profits.
While he acknowledged there was light at the end of the tunnel, Friesland Campina CEO Hein Schumacher said the COVID-19 crisis would continue to negatively affect the business for the first half of 2021.