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FrieslandCampina grows strongly despite European weakness

By Guy Montague-Jones , 01-Sep-2010

FrieslandCampina has reported strong overall growth in the first six months of the year despite a disappointing performance in Europe.

First half revenue was up 5.5 per cent to €4.3bn, supported by strong volume growth in Asia and Africa and €51m in positive currency translation effects.

Cees ‘t Hart, CEO of FrieslandCampina, said: “Particularly in Asia we were able to gain from the economic recovery and pass on the increased raw material prices through to our selling prices.”

Overall revenue from the Consumer Products International business group, which includes Asia, Africa and the Middle East, grew 15.9 per cent to €1.1bn.

European weakness

Meanwhile, in established European markets, FrieslandCampina struggled in the face of tough competition and a weak economic environment. Sales revenue at Consumer Products Europe dropped 2.3 per cent to €1.1bn.

“The development of consumer activities in Europe is however disappointing,” said ‘t Hart. “In this region both revenue and profit growth are under pressure.”

As for the other business units, Ingredients grew 11 per cent to €658m in H1 and Cheese & Butter achieved a 2.1 per cent increase in revenue to nearly €1.1bn.

Improved profitability

With the exception of Consumer Products Europe, all divisions contributed to improved profitability figures at FrieslandCampina. Operating income in H1 doubled to €238m compared to the equivalent period last year.

The Dutch dairy firm said the contribution of the Ingredients business was particularly positive. It turned a negative operating performance of minus €45m last year into a positive contribution of €43m this time around, thanks to improved sales of special ingredients and higher prices for standard products.

The improvements on the operating level translated into higher net profits, which rose to €156m from €78m last year.

Despite the recovery in H1, FrieslandCampina said that it can not make a definite statement about expectations for the full year. The company explained: “The economic outlook is at the moment uncertain. Minor fluctuations in demand and supply on the world could have major consequences for the price developments of dairy products.”

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