2022 was a top year for dairy giant FrieslandCampina. Net turnover grew by 22.4 percent to 14.1 billion euros. The same applied to net profit, which rose by 69.8 percent to 292 million euros. According to CEO Hein Schumacher, this is partly due to the ‘historically high milk prices’.
How can the success of the company be further explained? ‘We have not only benefited from the high milk prices. Other factors also played a major role. For example, the ingredients division had a high volume increase. The same applies to our infant nutrition activities.’
Historically high prices
According to Schumacher, consumer activities were under pressure due to rising inflation. ‘However, we have chosen not to pass this on in full. That’s also difficult when you’re dealing with contracts. If the costs suddenly rise quickly, you can’t pass them on all of a sudden.’ In addition, according to Schumacher, it is important to look for an optimum: ‘At a certain point, the customer simply drops out.’
Due to inflation, dairy farmers had to contend with historically high prices this year. ‘Milk prices have indeed risen enormously, from 37 to 58 cents. Fertilizer prices and feed costs also played a significant role in this. The costs of the entire chain are on the rise.’
“Suddenly you see the price of dairy drop enormously, so that the market value is now below the price we pay to our farmers.”
Turned market conditions
Nevertheless, the market conditions for FrieslandCampina have also changed, especially in the last quarter of 2022. This is partly due to a global trend, explains Schumacher. ‘Suddenly you see the price of dairy drop enormously, so that the market value is now below the price we pay to our farmers.’
So what are the expectations for the coming year? “This development will probably have a negative effect on the results of 2023.” Still, Schumacher is optimistic: “There is no question of deflation, the absolute level of the price is still more favorable than last year.”
