FrieslandCampina has posted a profits increase for the first six months of 2012, citing growth in infant and toddler nutritional product markets.
The Netherlands-based firm reported net revenue of €5.089bn for the first half of 2012 – an increase of 7.6% on the €4.73bn reported for H1 2011.
Net profits for the first six months of the year hit €138m, an 8.7% increase on the €127m recorded in the same six month period of 2011.
According to the Dutch dairy giant, most of the growth was achieved in the consumer and business-to-business markets for infant and toddler nutrition products. The dairy-based beverage category also achieved growth, particularly in Asia.
The firm added that the March 2012 acquisition of Philippines-based dairy company Alaska Milk Corporation contributed €63m in revenue.
Despite signs of a slight recovery in the European market, FrieslandCampina is forecasting that the tough economic conditions being experienced in Europe will continue.
Good first half
“FrieslandCampina can look back on a good first half of 2012,” said FrieslandCampina CEO Cees ‘t Hart.
The firm’s Consumer Products Europe business reported operating profits of €40m for the first six months of the year, compared with the “disappointing” €8m recorded in H1 2011.
“Both revenue and result rose despite the difficult market conditions in Europe and the steep drop in the market prices for butter and milk powder. In part due to this the guaranteed price of milk from the member dairy farmers was less than in the first half of 2011,” said Hart.
Consumer Products International - which incorporates sales from Asia, Africa, the Middle East and the FrieslandCampina Export brand – reported a 24% revenue increase. The firm reported revenue of €1.495bn for the segment, citing higher sales prices and infant and toddler nutrition product sales growth.
“Asia, where FrieslandCampina achieved a quarter of its total revenue, made a major contribution towards the revenue growth and improved result. The volume of infant and toddler nutrition has increased in both the Ingredients and Consumer Products International business groups.”
The company’s Ingredients business also reported a significant revenue increase. The business reported revenue of €836m – a 12.8% increase on the first half of 2011.
Meanwhile, the firm’s Cheese, Butter and Milk powder business reported sales revenue of €1.188bn – a 0.9% decrease compared to the first half of 2011. FrieslandCampina has attributed the drop to a fall in butter and milk powder prices.
Tough economic conditions
Despite the H1 profits increase, FrieslandCampina is forecasting that tough economic conditions in Europe will continue.
“The economic outlook remains uncertain,” said the firm’s results statement. “The forecast is that consumers in Europe will continue to be reticent in their spending due to the economic situation and that, as a result, dairy product consumption will remain under pressure.”
On a global level, however, FrieslandCampina is expecting a consumption increase as emerging market demand continues to build.
The firm has warned, however, that the worldwide supply of milk could come under some pressure as animal feed prices rise, European milk production slows and the European Union (EU) milk quota abolition in 2015.
"In the coming years the markets will become even more volatile,” the Dutch firm added.