Dutch dairy major FrieslandCampina, which is planning to cut around 1,000 jobs across its operations, has already revealed more than 100 could be axed from finance jobs.
The Milner cheese and Friso infant formula owner said this afternoon (10 November) it wants to consolidate “all operational financial activities” for its businesses in Europe, the Middle East and Africa at a financial shared-service centre in Budapest.
FrieslandCampina said the move was in line with its plans announced earlier in the day to cut costs and “optimise” its operations. The co-op said the transfer of operational financial activities from its sites in the Dutch towns of Wolvega and Amersfoort to the Hungarian capital is planned to start from January. Employees have been informed and FrieslandCampina said it expects 169 employees in its financial shared-service centre in the Netherlands would be affected.
“Particularly as a result of the direct and indirect consequences of the coronary pandemic, market conditions have deteriorated sharply in 2020 and accelerated structural improvement initiatives are necessary,” FrieslandCampina said. It argued the transfer of functions to Budapest would lead “to greater uniformity in the services provided to internal customers, a reduction in complexity, greater efficiency and future automation synergies”, as well as “lead to structurally lower costs”.
FrieslandCampina said this morning it expects the approximately 1,000 job cuts to come “mainly” in the Netherlands, Belgium and Germany and take place by the end of 2021.
Relocating activities and/or partially closing certain production sites, as was announced for FrieslandCampina’s plant in Rijkevoort in the Netherlands earlier this year, could take place.
FrieslandCampina will also continue to review its portfolio, indicating “non-core assets could be divested”.
CEO Hein Schumacher said: “To date this year, the majority of our operating companies have managed to increase revenue and we have also strengthened our positions in important consumer markets such as the Netherlands, the Philippines, Pakistan, Indonesia and China.
“We are weathering a perfect storm in 2020, however. Setbacks directly or indirectly caused by the coronavirus pandemic – such as the still closed border between Hong Kong and China, the fall in foodservice revenue worldwide, the devaluation of local currencies such as the Nigerian naira against the euro and lower bulk dairy prices – have significant financial impact on our profitability in 2020 and cannot fully be offset. Furthermore, profit margins in the Netherlands, Belgium and Germany remain under pressure.
He added: “We have the right strategy, but market conditions now require that we accelerate its implementation whilst intensifying the focus on profitable revenue growth and cost savings. We are fully aware that this will entail tough decisions which will have an impact on our people. Nevertheless, these interventions are necessary to enable us to operate successfully as a business and to continue to pay our member dairy farmers an exemplary milk price in the future.”
In July, FrieslandCampina reported a 0.3% increase in half-year revenue to EUR5.6m. The company’s operating profit in the first six months of 2020 rose 5.2% to EUR221m in part due to lower advertising and promotion costs. However, net profit fell 10.7% to EUR108m amid higher tax expenses.
In 2019, the co-op saw its revenues fall 2.2% to EUR11.3bn. It pointed to a decline in the milk supply of 3.4% as a result of a drop in the number of its member dairy farms. Operating profit increased 26.3% to EUR432m. Excluding one-off proceeds from disposals, operating profit increased 7%. Profit rose 36.9% to EUR278m, mainly as a result of one-off gains and improved operating profits from FrieslandCampina’s Consumer Dairy and Dairy Essentials divisions.