The new company, which ensued from the merger between Friesland Foods and Campina, pays its member dairy farmers a milk price of €36.37 per 100kg of farm milk (exclusive of VAT) for 2008, up 4.4% on 2007. Revenue was up €446m to €9.5bn. The profit for 2008 is €135m, down by €121m.
Cees ‘t Hart, CEO of Royal FrieslandCampina, said: “The diversity in our geographical markets, our broad range of value-added products and our brands prove their added value, enabling us to pay our member dairy farmers a good milk price in the difficult year 2008.
“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. Accordingly, cost savings, capital expenditure restrictions and production efficiency should be key this year. The current economic situation also offers opportunities, specifically because we just merged. Our pooled innovative power and our staff’s milk expertise should enable us to properly meet customers’ and consumers’ requirements, both in the area of consumer products and that of dairy ingredients.”
Consumer demand dropped in Asia and Africa in the first half of 2008 due to the high prices of dairy products. In addition, demand decreased as a consequence of the use of alternatives for basic dairy products by customers.
In combination with a gradually increasing global milk production, this resulted in imbalance between production and demand, which in turn led to stocks building up around the world. Consequently, prices for milk powder, whey powder, butter and cheese were put under pressure.
The weak US dollar also made competition on the world market difficult for eurozone countries. During the year under review, selling prices for cheese, butter and milk powder dived, resulting in selling prices for fresh and long-life dairy also gradually being put under pressure. In Asia and Africa, margins recovered in the second half of the year due to the decreasing purchasing costs of milk, milk powder and butter.
For 2009, additional measures have been taken in the fields of capital expenditure restrictions, cost control and production efficiency. No statement is being made on the expected result for 2009.
Source: Royal FrieslandCampina
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