27/07/2020 | Ingredients

FrieslandCampina reports stable revenue

FrieslandCampina has reported a strong start of the year with first-quarter results above last year, but in the second quarter it expects major impact from the Covid-19 pandemic on operations and results. Pressures were most notable due to a strong decline in out-of-home sales, lower basic dairy prices and a fall in infant nutrition sales in Hong Kong due to closed borders with China. This was partially offset by higher profit for consumer dairy and ingredients.

Revenue is stable (+0.3 %) at EUR 5.6 bn. However, on a comparable basis, operating profit is down 17.2 % and profit down 37.2 % versus the first half of 2019. Milk price for member dairy farmers decreased by 3.5 % to EUR 36.59 per 100 kg of milk due to a decline in basic dairy prices. Meanwhile, milk supply increased by 1.1 % to 5,144 m kg due to favourable weather conditions.

Global recession with an anticipated slow recovery necessitates further intervention in cost structure and structural improvement of productivity, notes FrieslandCampina. The company recently strengthened its market positions in ingredients worldwide and in key consumer markets such as China, Indonesia, Nigeria, Pakistan as well as its home markets of the Netherlands and Germany. The business groups Dairy Essentials and Ingredients saw revenue increase by 5.8 % and 3.6 %, respectively.