Profits at the Dutch dairy co-operative saw operating profits rise by 8% to €275m in the first six months of the year.

This is despite 1% less milk supplied, which fell to 5.4bn litres in the first six months of 2017.

This was as a result of two temporary milk volume control measures as a result of environmental regulations.

Once the effect of exchange rates are excluded, profits were up 13% compared with the same period last year.

Revenue

Revenues increased by 10.7% to €6.1bn due to increased sales prices coming from the recovery in dairy markets and the acquisition of Engro Foods in Pakistan.

The group took a €20m hit from its 1% stake in its joint venture with China Huishan Dairy Holdings Company.

The venture, based in China’s northeastern Liaoning province, was set up to manufacture and market infant milk formula under FrieslandCampina’s Dutch Lady brand using Chinese milk.

Since March, it has been rocked by allegations of misappropriation of funds and its partner was unable to publish details of its financial position.

Recovery

In the first six months, the milk price for member dairy farmers increased by 27% to 38c/l.

The rise in operating profits was mainly driven by the strong recovery of the cheese and butter sales prices.

Roelof Joosten, CEO of FrieslandCampina, said the higher sales prices for butter and cheese lie at the root of the milk price recovery.

The group saw volumes increase in southeast Asia while it said that consumer volumes in Europe, in particular, remained under pressure.

It said that in Germany, the Philippines and Nigeria, result trends are not as positive due to local market conditions and negative currency translation effects.

The group recorded a €9m profit on the sale of its 8% stake in Synlait Milk.

The cashflow from operating activities decreased to €29m mainly due to the higher working capital requirements and the higher guaranteed price.