Strong sales in Asia, Africa and the Middle East, lower costs and success in pushing through price increases boosted FrieslandCampina profits in 2010, the dairy group said today (16 March).
The Netherlands-based processor booked a 57% rise in net profit to EUR285m (US$396.5m), with operating profit up 68% to EUR434m.
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Growing sales helped FrieslandCampina’s profits – net revenue increased 10% to EUR8.97bn. Higher selling prices, stronger volumes and benefits from currency fluctuations buoyed FrieslandCampina’s top line.
FrieslandCampina also pointed to the synergy benefits of the continued integration of the business after the merger of Friesland Foods and Campina in 2009. The company’s restructuring costs, meanwhile, were also EUR96m lower in 2010 than the year before.
Nonetheless, the operating profit performance of FrieslandCampina’s divisions was mixed.
Operating profit from FrieslandCampina’s international consumer products division – which takes in markets in Asia, Africa and the Middle East – rose 23% to EUR356m, as sales climbed 20.3% thanks to better volumes and foreign exchange.
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By GlobalDataHowever, operating profit from FrieslandCampina’s European consumer products business dropped 26% to EUR126m. The company said “bad economic conditions” hit demand for dairy, while it could only “partially” pass on higher costs. The firm’s promotional expenses in Europe also rose.
European consumer sales did rise 1.5% as FrieslandCampina’s business in Russia grew. However, in most other markets, volumes were lower and prices “under pressure”.
FrieslandCampina’s operating losses from its cheese and butter business narrowed, reaching EUR63m in 2010 after losses of EUR98m in 2009.
Notably, FrieslandCampina’s ingredients unit posted an operating profit of EUR99m thanks to higher selling prices. In 2009, the unit made an operating loss of EUR20m.
CEO Cees ‘t Hart said: “The year 2010 ended with a good result. The market share of most brands were improved or maintained. Volumes rose. Both the revenue and the operating profit increased in line with our ambition to grow and create value.”
He added: “In 2010 the merger between Friesland Foods and Campina which started at the end of 2008 was completed. There is a clear focus on growth, further professionalisation of the organisation and cooperation. Our market focus and efficiency have improved, so that FrieslandCampina is now ahead of schedule in realising its synergy objectives.”
