2023 Hits FrieslandCampina: Market and Costs Bite

2023 Hits FrieslandCampina: Market and Costs Bite! The 12 months of 2023 became a sturdy power for the Dutch dairy giant Friesland Campina, as it went through a year full of demanding situations. The company took a hit in its annual performance, with sales falling 7.1% to 13.1 billion euros from 14.1 billion euros a year in advance. It wasn’t just one issue that threw them off the path; A mixture of poor currency consequences, the sale of some German customer factories and a slowdown in customer calls in the face of rising charges have all performed a function

2023 Hits FrieslandCampina: Market and Costs Bite

The company’s operating profit saw a dramatic drop, plunging 84.1% to just €75 million from a much healthier €471 million in 2022. Despite pumping €568 million into advertising and promotions to try and turn the tide, down slightly from €601 million the previous year, the financial headwinds were just too strong.

Adding to the storm were one-off restructuring costs totalling €136 million as part of its ambitious “Expedition 2030” strategy, along with other unexpected expenses and higher financing charges, all of which culminated in a nettlesome net loss of €149 million for the year.

CEO Jan Derck van Karnebeek didn’t sugarcoat the situation, acknowledging 2023 as a particularly tough year for the company. While some segments, like specialized nutrition and ingredients, managed to hold their ground, it wasn’t enough to offset the downturns elsewhere within the business. The financial squeeze meant that, for the first time, FrieslandCampina couldn’t offer its member dairy farmers the supplementary cash payment they’ve come to expect, a decision made all the more bitter by rising costs and ongoing efforts to enhance sustainability on the farms.

The company also reported a slight dip in the supply of member milk, with volumes dropping 1.4% to 9,369 million kilograms, reflecting a decrease in the number of member dairy farms. The price paid to member dairy farmers for their milk fell sharply by 16.2%, further straining relationships and financial stability.

On a brighter note, FrieslandCampina did make some environmental headway, cutting greenhouse gas emissions from production and milk transport by 9.4% over the year, signalling a commitment to more sustainable practices despite the financial gloom.

Looking ahead to 2024, the outlook remains cautious. FrieslandCampina anticipates continued pressure on milk production across key dairy-exporting regions. The company is also bracing for higher costs for raw materials, packaging, and transportation, fueled by ongoing conflicts and geopolitical instability around the globe. It’s clear that the path forward is fraught with uncertainty, but with resilience and strategic adjustments, FrieslandCampina is determined to navigate through these turbulent times.

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