Difficult market conditions and one-off restructuring costs negatively affect results

Date: 21.02.2024Source: FrieslandCampina

Key 2023 developments and results in comparison to 2022:

  • In 2023, revenue declined by 7.1 percent to 13.1 billion euros due to unfavourable currency translation effects, sale of part German consumer activities and declining volumes in consumer markets, in particular due to high inflation.
  • The 75-million-euro operating profit was negatively affected by the difference between the guaranteed price of member milk and market prices for commodity dairy products, the sale of expensive stocks in a market of low prices, and unfavourable currency translation effects.
  • Excellent business results for the Specialised Nutrition and Ingredients business groups, and the Professional business strengthened its market position.
  • One-off restructuring costs of 136 million euros for the implementation of the Expedition 2030 strategy, other one-off costs and higher financing charges resulted in a net result of -149 million euros.
  • Significant higher operating cashflow of 831 million euros due to improved working capital.
  • Milk price for member dairy farmers 48.08 euros per 100 kilogrammes (-2 percent).
  • Due to negative annual results, there will be no supplementary cash payment for member dairy farmers.
  • Positive progress on sustainability agenda; significantly reduced the company’s greenhouse gas emissions by 9.4 percent and on member dairy farms by 4.3 percent.
  • Started with transformation, Expedition 2030, in second half of 2023, aimed at a top performing and future proof FrieslandCampina.

Commented Jan Derck van Karnebeek, CEO Royal FrieslandCampina N.V.: “2023 was a difficult year for FrieslandCampina. Business results, particularly with respect to our global consumer dairy and Trading activities, were severely under pressure. By contrast, the Specialised Nutrition and Ingredients business groups had a good year, although this was insufficient to compensate for the disappointing results of the other two business groups. The disappointing operating profit, combined with one-off costs and higher financing charges, resulted in a negative net result for 2023. As a result, we are not providing a supplementary cash payment to our member dairy farmers. This is disappointing, all the more so given the increased costs for our members and costs for efforts to further increase sustainability at farms.

With a view to these disappointing results, we initiated a transformation, Expedition 2030, in the second half of 2023, fully focused on remaking FrieslandCampina into the leading dairy company it has always been.

The core of Expedition 2030 consists of seven, powerful business groups, each with its specific markets, product categories, strategy and the required people, competencies and investment levels. FrieslandCampina’s strength lies in the diversity of our business. We have linked the new business structure to an integral cost reduction programme to ensure that the business groups, our production environment and support services, have a fitting cost structure. Unfortunately, this means that over the next two years 1,800 jobs will be eliminated worldwide. This was a difficult, but necessary decision and we will do everything in our power to effectively support the affected employees in this process.

We will also continue to focus on making our dairy chain more sustainable. We are doing this for our owners – our member dairy farmers – for our employees worldwide and of course, also for our customers and consumers, and all other stakeholders in a successful and future-proof FrieslandCampina.”

David Cox / IDM

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