FrieslandCampina reports significantly lower profit due to impact of corona pandemic and restructuring costs. CEO Hein Schumacher: “The direct and indirect impacts of the corona pandemic that really became evident within the company starting in March, overshadowed the excellent results in the first quarter. FrieslandCampina’s operating profit was hard hit by this. In addition, the accelerated implementation of the Our Purpose, Our Plan strategy – a far-reaching but necessary decision required to successfully operate as a company in the future – resulted in a restructuring charge of EUR 106 million in 2020. Both factors led to a significantly lower profit as a result of which no supplementary cash payment over 2020 can be made to members and no member bonds can be issued. A huge disappointment for our members.“
2020 revenue declined by 1.4% to EUR 11.1 billion. Adjusted for currency translation effects, revenue remained virtually stable.• Higher sales of Ingredients, retail and e-commerce offset lower sales in Hong Kong and out-of-home channel, adjusted for currency translation effects. E-commerce revenue increased by more than 50% worldwide.
Operating profit decreased by 38.0% to EUR 268 million due to lower results in Hong Kong and out-of-home, currency translation effects and a EUR 106 million restructuring charge. Excluding restructuring charge and currency translation effects, operating profit decreased by 10.9%.
Profit declined by 71.6% to EUR 79 million, primarily due to the significantly lower operating profit and a higher effective tax burden.
The milk price for member dairy farmers decreased by 5.9% to EUR 35.72 per 100 kilos of milk. No supplementary cash payment will be made to member dairy farmers for 2020 and no member bonds will be issued. The interest on member bonds will be paid, however.
In 2020, FrieslandCampina’s operating companies in 28 of the 41 markets realised strategic revenue growth in comparison to 2019. Despite the corona pandemic, net revenue before currency translation effects remained virtually stable, but currency translation effects had a negative impact of -1.3% on revenue, mainly due to the devaluation of the Nigerian naira and dollar-related currencies in Asia. Reported net revenue in 2020 decreased by 1.4% to EUR 11.1 billion (2019: EUR 11.3 billion).
After a strong start in the first quarter, the business group Consumer Dairy’s revenue dropped by 3.3% to EUR 5,735 million (2019: EUR 5,931 million) as a result of the corona pandemic. There was strong growth in the sale of consumer brands through the retail channel, while the lack of out-of-home activities and negative currency translation effects put revenue under pressure. The continued closure of the border between China and Hong Kong caused Specialised Nutrition’s revenue to decline by 7.1% to EUR 1,119 million (2019: EUR 1,205 million). In spite of the fact that Ingredients was also affected by a decrease in foodservice and out-of-home demand, its revenue grew by 5.3% to EUR 1,816 million (2019: EUR 1,724 million), in particular driven by the sale of caseinates and whey proteins for sports nutrition for example. The revenue of Dairy Essentials grew by 3.4% to EUR 2,467 million (2019: EUR 2,385 million) primarily due to the sale of cheese to industrial buyers and the retail sector.