Exceptional dairy situation drives Friesland profits

By staff reporter

- Last updated on GMT

Related tags: Milk

Friesland Foods has reported a strong revenue and profit story for
the first half of 2007, largely thanks to higher prices commanded
by its milk powder and industrial ingredients in the face of demand
in excess of supply.

The Netherlands-based multinational reported revenue of €2.4bn for the six month period, up 2.5 per cent on the same period last year. Net profit was up 36 per cent to €70m. As demand is outstripping supply, milk powder prices rose in the first half of the year compared to 2006 levels. "Thanks to the upward trend in the dairy market, our member dairy farmers saw the price of their milk rise for the first time in years,"​ said the company. While this situation has cast a rosy glow on the firm's balance sheet for now, it is being very cautious about what the future will hold since the markets are so volatile. Milk prices and selling process cannot be forecast, so Friesland, for its part, has issued no forecast on its overall 2007 performance. It also said that it will not be able to fully on-change raw material price increases in the second half of the year, and demand may decline - and put pressure on volumes - as customers balk at higher prices. But while, for now, the dairy market gives a good backdrop to the firm's activities, Friesland said that the operating profit for the reporting period could be attributed to "strong development of key drive brands in the strategic markets and successful initiatives in the area of enhanced nutrition". Just this week Friesland's Domo division, which is centred on ingredients, announced the launch of a new range of whey protein concentrates for low-fat yoghurt called DOMO Hiprotal 60MP, which was developed in partnership with Nandi Proteins. ​In terms of strategic markets, Southeast Asia and Africa performanced "outstandingly" for consumer products - in particular those with an enhanced nutrition slant. Revenue from Asia rose 13 per cent to €484m - albeit weighed down by €13m due to unfavourable exchange rates. In Europe, revenue was up in almost all the countries were Friesland is active - and 2.7 per cent overall to €1.86bn.

Related topics: Manufacturers

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