FrieslandCampina reports 8.7% rise in H1 profit

Dutch dairy cooperative Royal FrieslandCampina has reported that its profit for the first half of 2012 increased by 8.7% to €138m, from €127m in 2011, helped by volume growth and a focus on international operations.

Revenue rose 7.6% to €5.08bn, compared with €4.73bn in 2011, due to higher sales prices, volume growth and the impact of currency translation.

The company noted that most of the volume growth was seen in infant and toddler nutrition segment, as well as in the dairy-based beverage category, especially in Asia.

Cees ‘t Hart, Royal FrieslandCampina CEO, said the company posted higher revenue and profit despite challenging market conditions in Europe and rapid decline in 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," Hart added.

After excluding the €15m cost of meadow milk premium, operating profit grew 3.3% to €217m.

Segment-wise, Consumer Products Europe reported a 1.1% decline in revenue to €1.42bn, as volumes fell due to lower consumer spending; however, operating profit soared to €40m, up from €8m in 2011.

Consumer Products International division, which covers Asia, Africa, the Middle East and exports, reported a 24.1% rise in revenue to €1.49bn, due to volume growth, especially in infant and toddler nutrition products, while revenue increased 21.7% to €224m, driven by higher sales prices.

In the Cheese, Butter & Milkpowder division, revenue declined 0.9% to €1.18bn, due to lower sales prices for butter and milk powder, and operating profit declined by €80m because of high pressure on margins across most of the commodities range.

The Ingredients division posted a 12.8% increase in net revenue to €836m, and profit increased 19.1% to €106m, as the company passed on the higher cost of raw materials to consumers.

For the rest of 2012, the company said that the economic outlook remains uncertain, and the worldwide supply of milk could be under pressure due to drought in the US, low milk production in EU and rising animal feed prices.