FrieslandCampina announces 16.7% drop in profits for H1 | Progresiv
Dutch dairy giant FrieslandCampina has reported a profit decrease of 16.7 percent for the first half of 2016 as the global milk crisis bites into revenues. The company says its due to losses on milk powder and cheese and comes despite a growth in infant nutrition and dairy-based beverages. 
The 16.7 percent decrease amounts to 160 million euros compared to the same period in previous financial year.
Due to the significant increase in the member dairy farmers’ milk production (+11.9 percent), basic dairy products such as milk powder, foil cheese and butter were produced that had to be sold below cost.
Revenue went down by 2.2 percent to 5,522 million euros. Although the decrease in revenue to lower sales prices was largely compensated by a higher volume. The milk price for member dairy farmers decreased to 30.24 euros per 100 kilos of milk (first half-year 2015: 36.48 euros) due to the lower guaranteed price for raw milk and the lower value creation (performance premium and reservation in member bonds). The interim pay-out amounts to 1.170 euros per 100 kilos of milk (2015: 2.018 euros).
Meanwhile there was growth in volume in the infant nutrition in China and South-East Asia, dairy-based beverages in South-East Asia and Eastern Europe and ingredients.
The outlook for the remainder of 2016 is still unclear as the international milk sector in general continues to go through turbulent times. Milk prices have bottomed out and worldwide supply of milk is expected to decrease during the second half of 2016. Expectations are that demand for dairy products will modestly increase, mainly due to the limited purchasing power in many oil-exporting countries, political instability in other locations and the limited demand for dairy products in huge markets like China as well as Russia’s continuing block of EU dairy products.
The effect of the European Commission’s measures to reduce milk production in the European Union based on support measures is as yet unclear as is the impact of possible voluntary restriction of production of cooperatives or producer associations, says FrieslandCampina. (www.foodingredientsfirst.com)
