Valio, the Finland-based dairy group, saw its sales drop almost 12% in 2015, the latest company in the sector to report it felt the pressure from the tough trading conditions in the sector.
The co-operative booked net sales of EUR1.72bn (US$1.9bn) in 2015, down 11.9% on 2014. Net sales in Finland, which accounts for 65% of Valio’s business, declined 11.7%. Valio’s international net sales dropped 12.3%.
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Valio said the end of EU milk quotas in April led to over-production in the “large central European dairy countries”, leading to a global supply that exceeded demand. That demand, Valio said, echoing recent comments from other dairy companies, fell due to Russia’s continued restrictions on dairy imports and to weakening consumer purchasing power in Asia.
The over-supply led to lower export prices for Valio and caused cheaper imports to enter Finland, a market where domestic purchasing power was low.
Valio said its “milk margin” – net sales less other costs excluding depreciation, the price paid for raw milk and interest on a shareholder loan paid to owners – was EUR806m, compared to EUR974m in 2014.
Owned by dairy co-operatives, Valio has a “mission” of paying all profits from its operations to its shareholders. Valio takes in and processes all the milk produced by its owners and pays them a uniform price irrespective of the location or size of the farm.
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By GlobalDataIn 2015, Valio paid its owner entrepreneurs EUR739m, versus EUR593m a year earlier.
The company insisted it was able to pay 31.8 euro cents for raw milk “a much higher price compared with the EU average”.
