FrieslandCampina, the Dutch dairy multinational, has reported a drop in revenue and profits in their half-yearly results announced this week.
The company puts this down to difficult trading conditions in its infant nutrition market and making provision for a court ruling in Thailand.
Revenue for the first half of the year was down just under 2% to €5.5bn, while profits were down a massive 42.6% to €62m.
This is explained by an exceptional item – the provision of €57m in respect of a court ruling in Thailand.
Milk supply in the first half of 2021 was 2.2% down to 5.025m kg
This was added to by lower-than-expected returns from the infant nutrition division, caused by difficult market conditions in Asia.
When the exceptional item of the court ruling and currency movement are taken out, the operating profit was still down 8.6% to €202m.
Milk supply in the first half of 2021 was 2.2% down to 5.025m kg, (4.878m litres) due to a combination of colder than usual weather and high feed prices.
The company recognised the higher basic dairy prices dues to global demand for dairy products and paid 1.8% higher prices to farmer suppliers at €37.25/100kg or €36.13/100l.
CEO Hein Schumacher said: “Good results by the food and beverage and trading business groups and realised cost reductions were not sufficient to offset the strong headwind in infant nutrition.”
He also noted recovery from COVID-19 in other parts of the company business and that the transformation plan announced in November 2020 to reduce costs is on track.