2022 was a banner year for dairy giant FrieslandCampina. Net sales grew by 22.4% to 14.1 billion euros. The same goes for net income, which rose by 69.8% to 292 million euros. According to CEO Hein Schumacher, this is partly due to “historically high milk prices”.
How can the success of the company be further explained? ‘Not only have we benefited from high milk prices. Other factors also played an important role. For example, the ingredients division had a sharp increase in volumes. The same goes for our child nutrition activities.’
Historically high prices
According to Schumacher, consumer activities were under pressure due to rising inflation. ‘However, we have chosen not to broadcast it in full. This is also difficult when you’re dealing with contracts. If costs suddenly go up quickly, you can’t pass them on suddenly.’ Furthermore, according to Schumacher, it is important to look for the optimum: “At some point, the customer simply leaves.”
Due to inflation, milk producers had to contend with historically high prices this year. ‘Milk prices have really gone up enormously, from 37 cents to 58 cents. Fertilizer prices and feed costs have also played a significant role in this. The costs of the entire supply chain are increasing.’
“Suddenly you see the price of dairy products go down enormously, so that the market value is now less than the price we pay our farmers.”
Transformed market conditions
However, 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 products go down massively, so that the market value is now less than the price we pay our farmers.”
So what are the expectations for next year? “This development will likely have a negative effect on 2023 results.” However, Schumacher is optimistic: “It’s not about deflation, the absolute price level is even more favorable than last year.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
