Russian Valio dairy sales fell €120m in 'annus horribilis' 2014


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Russian Valio dairy sales fell €120m in 'annus horribilis' 2014

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Sales of Valio dairy products in Russia fell €120m (US$133m) to €258m (US$285m) in 2014 - a year it branded its “annus horribilis.”

In its results for the twelve months ended December 31, published yesterday, Valio reported that Russia sales in 2014 totalled €258m - down from €378m (US$418m) in 2013.

Under "normal conditions", this figure would have exceeded €400m (US$443m), said Valio.

Exports of Finnish Valio dairy products totalled €450m (US$450m) in 2014. Russia accounted for 37% of this total, approximately €166.5m (US$184m). 

Russia, Valio's largest export market, accounted for 49% of Valio exports in 2013.

But since August 2014, it has been unable to ship products to the country. 

"Temporarily not available"

On August 7 2014, Russian Prime Minister Dmitry Medvedev introduced a one-year ban on the import of beef, pork, poultry, fruit, vegetables, milk and dairy products from the European Union (EU), US, Australia, Canada and Norway.

Lactose-free milk and dairy products were removed from the Russian import blacklist on August 21, which Valio branded "extremely significant."

Within a week, however, trucks containing Valio lactose-free milk, yogurt, cottage cheese and sour cream were stopped at the Russian border. 

Finnish Valio products, including Valio FIN butter, Valio Eila lactose-free products, and Valio Oltermanni cheese, are still "temporarily not available"​ in Russia.

"The favourable development of exports to Russia collapsed in early August due to the import embargo, and hundreds of millions of litres of milk had to be processed into industrial butter and milk power for world markets, the prices of which were at a record low,"​ said Valio. 

"Valio was hit by far the hardest of all companies in Finland by Russia's import restrictions."

Finnish competition

Total Valio revenue fell 3.9% from €2.029bn (US$2.25bn) in 2013 to €1.95bn (US$2.15bn), which attributed in part to a 9% fall in international sales.

Revenue also fell 0.8% in Finland, where Valio said competition is "tight." 

"Valio's market share in basic milks fell below 30% because the company is not permitted to engage in price competition on market terms," ​it said.

"47% of the cheese consumed in Finland was imported, and Valio is now the only major domestic player making cheese from Finnish milk in Finland."

"The economic situation in Finland made consumers focus even further on inexpensive products," ​it added.

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