This is a subscriber-only article
Dutch dairy giant FrieslandCampina has reported a 37% decline in profits to €227m for its 2017 financial year. The farmer-owned co-op attributed the decline in profits to the write-down of assets in China and Germany, as well as some restructuring costs.
Friesland reported a 10% increase in sales for 2017 to just over €12bn. This was due to improved dairy market prices and the inclusions of acquisitions made in the last year.
Operating profits in the business declined more than 20% to €444m, with profit margins falling from over 5% in 2016 to 3.7% last year. Friesland said profit margins were under pressure due to one-off costs, negative currency effects and increased raw material prices (higher milk prices).
The dairy co-op said it paid an average milk price of 0.40c/kg in 2017, which was a 24% increase on the average milk payout the previous year. In total, Friesland said it paid out some €4.3bn to farmers for milk in 2017, the highest ever since the company was created.
The dairy giant said milk supply from farmers was unchanged year-on-year at 10.4bn litres, despite the new phosphate quota system coming into effect in the Netherlands in 2017.
“2017 was a challenging year for FrieslandCampina,” said chief executive Hein Schumacher. “On the one hand, we have seen a positive increase in revenue and a significant increase in the milk price for our member dairy farmers. On the other hand, write-offs of assets in China and Germany, pressure on volume in Europe and restructuring charges reduced profit,” he added.
Dairy markets: FrieslandCampina cuts December milk price
SHARING OPTIONS: