FrieslandCampina reports 26.9% increase in full-year 2012 net earnings

Dutch dairy cooperative Royal FrieslandCampina has reported a 26.9% increase in its full year net earnings to €274m, compared with €216m in 2011, driven by a higher operating profit and lower financing costs.

The cooperative posted a 7.1% increase in net revenues to €10.3bn, compared with €9.6bn in the previous year, due to a shift in volumes from commodities to growth categories such as infant and toddler nutrition, dairy-based beverages and branded cheese.

FrieslandCampina posted a 19.6% rise in operating profit to €482m as the company passed on the increases in raw material and packaging to the sales prices.

Operating costs increased by 6.5% to €9.8m due to higher packaging, raw materials and energy costs.

Segment-wise, FrieslandCampina’s consumer products international business reported a 29.3% increase in revenues from third parties to €3.18bn, compared with €2.4bn in 2011, supported by volume growth, price increases, the acquisition of Alaska Milk, and positive currency effects.

The cheese, butter and milk powder business posted a 4.2% drop in revenues to €2.3bn, compared to €2.4bn in 2011 as a result of low world market prices for these products.

Revenues of the ingredients business increased by 10.9% to €1.6bn, compared with €1.5bn in the previous year driven by higher volumes and sales prices.

FrieslandCampina CEO Cees ‘t Hart said that every year the company invests about €400m to €500m, to achieve growth in order to process the increased quantity of member milk.

"Most of the investments are taking place in the Netherlands and, in particularly, in the area of expanding the production capacity of infant and toddler nutrition – the segment in which the most robust growth is being achieved by responding to the increasing demand from Asia for high-quality dairy products," Hart added.

As of 31 December 2012 the company’s net debt totalled €685m, €14m less than at the end of 2011.

For fiscal 2013, FrieslandCampina expects a slight rise in demand for dairy due to increasing consumption at a global level, particularly in Asia, South America, Russia and Africa.