Valio reports better sales in 2017

By Jim Cornall contact

- Last updated on GMT

Valio said the milk market situation remains challenging despite overall economic growth.
Valio said the milk market situation remains challenging despite overall economic growth.
Finnish company Valio said 2017 was a good year from a business development perspective: net sales increased by 4.3%, and it was able to pay the co-operatives a steady milk price despite the challenging market situation.

Valio introduced more than 100 new products in 2017, and maintained a positive growth trend in added value products both in Finland and in exports. In addition to existing export markets, the company also entered new consumer markets.

Other significant events included the commissioning of the world’s most modern snack plant in Riihimäki and quality and production reforms to improve animal welfare.

In addition to the board of director’s report and financial statements published today, Valio will publish its sustainability report 2017 later in April.

Challenging milk market situation

Valio Group net sales in 2017 were €1.71bn ($2.12bn), compared to €1.64bn ($2.03bn) in 2016.

Domestic net sales remained unchanged and international net sales increased by 12.4%.

Valio continued its growth particularly in Sweden, the Baltics, Russia and China. The milk margin was €797m ($987m) and the milk return was 37.9 cents per liter.

However, the company said the milk market situation remained challenging despite the overall economic growth.

Valio’s CEO Annikka Hurme said the biggest challenges come from the dairy industry’s operating environment.

“The imbalance of the global markets continues, and the growth in milk production is expected to outpace the demand for dairy products,”​ Hurme said.

Milk overproduction

The very low price of milk powder and the drop in the price of industrial butter from the peak prices at the beginning of the year chipped away at Valio’s profitability, the company said, adding it expects the situation to continue because of the high volume of EU milk powder intervention stocks.

Valio said the cause is the EU and global overproduction of milk.

About 35-40% of Valio’s raw milk is made into powder and butter, so changes to productivity have a direct impact on Valio’s profitability. The overall downward trend in the consumption of dairy products in Finnish markets is increasing the channeling of raw milk into these industrial products. Therefore, it is important to grow the exports from Finland.

“Accessing new export markets and achieving profitable growth requires us to invest in personnel and in marketing in the upcoming years,”​ Hurme said.

“Consequently, we are constantly looking for new ways to do things more agilely and efficiently. There are no shortcuts to accessing new export markets; it’s a matter of going through the regulatory permit processes as well as long-term building of recognition.”

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