FrieslandCampina, the dairy giant formed by the merger of Friesland Foods and Campina, posted a 43.7% drop in profits today (26 March), as the global recession affected product pricing.
Net profit dropped to EUR135m (US$183.9m) in 2008 from EUR183.3m in 2007. The company said a “plentiful” supply of dairy products due to increased global milk production led to “pressure on prices”.
FrieslandCampina’s operating profit was also hit, dropping to EUR248m from EUR373m in the previous year. The company said that external costs related to the merger came to EUR28m.
Revenue however, rose 5% to reach EUR9.5bn, as a result of price increases earlier in the year and the contribution of acquisitions.
Revenue growth was 9% for FrieslandCampina’s international consumer products business, 7% for ingredients, 3% for cheese & butter and, for the company’s western European consumer products unit, revenue growth was 1%.
FrieslandCampina said 2009 selling prices would remain “under pressure” as a result of the economic downturn. The company said it would cut capital expenditures this year and focus on “cost control and production efficiency”.
“The global economic recession is bound to affect price developments in the market, our results and, hence, the milk price for member dairy farmers in 2009,” said Cees ‘t Hart, FrieslandCampina’s CEO. “Accordingly, cost savings, capital expenditure restrictions and production efficiency should be key this year.”