Home Coffee product FrieslandCampina records strong overall performance despite infant nutrition headwinds

FrieslandCampina records strong overall performance despite infant nutrition headwinds

FrieslandCampina records strong overall performance despite infant nutrition headwinds

Feb. 22, 2022 — FrieslandCampina reports strong revenue and operating profit according to its latest annual report for the fiscal year ending 2021. Specifically, the dairy giant’s F&B business group performed well across the board. the year with revenues up 4.3% to 7.9 billion euros (8.9 billion dollars).

The F&B business group increased its Lattiz market share in key markets; the Netherlands, Belgium, France and Denmark entered new markets with the smart milk solution for coffee professionals in Cyprus, Poland and the Czech Republic. Several new product innovations were also delivered in 2021.

The group’s performance was driven by price increases and growth in out-of-home activities, mainly in Europe. Before currency effects, growth is estimated at 5.8%.

The group’s overall turnover increased by 3.2% to 11.5 billion euros (13 billion US dollars), mainly due to price increases, higher dairy prices and the recovery of out-of-home markets in Europe. Operating income increased by 32.5% to 355 million euros (402 million US dollars).

Profit rose 117.7% to €172 million (US$195 million) due to lower restructuring costs and improved professional and business group results.

Profitable F&B Product Lines
The Valess plant-based product line performed well in 2021 with an increase of more than 30% in sales and a significantly improved profit margin. This resulted from innovations such as Valess Nuggets, Beef Style Burger and Family Packs and significant growth in distribution in the Netherlands and Germany.

FrieslandCampina Ingredients entered the plant-based protein space last year with two new powdered solutions developed with AGT Foods, a supplier of value-added pulses, staples and ingredients. The performance of the F&B group was driven by price increases and growth in out-of-home activities.

FrieslandCampina Ingredients has introduced new products focusing on vitality and mobility. This includes the launch of plant-based protein-rich sports products under the Plantaris brand and a climate-neutral powder base for infant nutrition.

Consumer business revenue through the e-commerce channel increased by 56% globally. For FrieslandCampina as a whole, e-commerce revenue increased by 18%.

Debic Cream Plus Mascarpone was launched in September in the Netherlands, Belgium, France, Italy and Poland for the hospitality and bakery industry.

Operating cash flow remained at a satisfactory level of 594 million euros ($673 million) down compared to 2020, mainly due to a defined one-time payment of 88 million euros ($100 million ) to a pension plan dating from 2005.

Child Nutrition Challenges
In infant nutrition, Frisgo, an app that connects Mom & Baby stores, local service providers and Friso infant formula, has made progress in reaching small Chinese towns with its “road to market” model. In 2021, Friso Prestige Bio succeeded in increasing its market share in the organic segment in China and Hong Kong fivefold compared to 2020.

However, FrieslandCampina notes that the infant nutrition business was under “severe pressure”, which impacted the results of its Ingredients and Specialty Nutrition business.

A declining market due to a sharp drop in the birth rate and strong local competition were the main reasons for a lackluster start to the year. This was contrasted by strong revenue growth and an improved result at FrieslandCampina Professional, especially in the second half of 2021.

For 2022, inflation and rising prices are the main challenges to keep the result up to par, notes Hein Schumacher, CEO of FrieslandCampina.

“We are cautiously optimistic about the recovery of the professional market, as well as continued high dairy prices. Combined with a slightly improving infant nutrition market, we expect sales to increase by 2 to 4% at constant margins compared to 2021 for the full year.

Milk Supply StatusThe plant category performed well.
Members’ milk supply decreased by 3.2% to 9.745 billion kg, mainly due to relatively cold weather in the early months of 2021 and the impact of high feed costs.

The improvement in the commercial result allows a subsequent cash payment of €0.14 per 100 kg of milk to the member dairy producers. In addition to the FrieslandCampina guaranteed price, a total of €14 million ($16 million) will be paid to member dairy farmers in 2022.

Total compensation paid to member dairy farmers for their milk supplied increased by 6.2% to €3.8 million ($4 million in 2021). This increase is mainly due to the increase in the price of milk.

Overall, the transformation acceleration implemented by FrieslandCampina in November 2020 is on track. The focus is on growth, structural cost reduction and optimization of the organizational structure.

By Inga de Jong

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