‘Sturdy Headwind’ In Toddler Diet Impacts FrieslandCampina In H1

0
374

A “strong headwind” in the baby food business, particularly in Asia, had a negative impact on the sales and profits of the milk giant FrieslandCampina in the first half of the financial year.

The group stated that sales in the reporting period decreased by 1.8% to € 5.5 billion or increased by 0.8% after adjusting for currency effects. Income declined 42.6% to € 62 million, mainly due to a provision of € 57 million for a court ruling in Thailand.

“Difficult” market conditions in infant nutrition

“Good results in the Food & Beverage and Trading divisions, as well as cost reductions that have been implemented, are not enough to offset the strong headwinds in infant nutrition,” commented Hein Schumacher, CEO.

“The market conditions in this important category for FrieslandCampina remain difficult. This had a significant impact on the results of the Specialized Nutrition and Ingredients business units.”

In the Food & Beverage division, sales rose by 1.0% (+ 4.1% excluding currency translation effects), with the Parrano, Chocomel and Valess brands performing well.

The business also benefited from a rebound in the out-of-home channel, as well as improved performance in Pakistan and “much of Africa”.

However, the Specialized Nutrition and Ingredients businesses were negatively impacted by the Group’s children’s nutrition brands’ performance in Asia, declining 14.9% and 3.9% respectively.

‘Cautiously Optimistic’

Looking ahead to the rest of the year, Schumacher added that while the company was “cautiously optimistic” about the recovery in its consumer and out-of-home sales channels, the Asian baby food market “does not expect any recovery”.

He also warned about the ongoing effects of the pandemic and added: “The corona pandemic is not over yet, and neither is the uncertainty that goes with it, especially not in countries where the vaccination rate is still relatively low. We have seen the number the number of infected people has risen rapidly again in various countries, so caution is still advised. “

However, the Group’s transformation plan announced in November 2020 remains “on track”, with the group planning to optimize its organizational structure, invest more in sustainability and cut costs in the short to medium term.

By the end of this year, 1,000 jobs in the company are to be cut, so that from the beginning of 2022 the costs are to fall by around 100 million euros per year.

FrieslandCampina is also in the process of selling non-core businesses. The group recently announced a strategic partner for its feed business, Nutrifeed, and relocated its Russian consumer goods to Ehrmann.

“For the second half of 2021, FrieslandCampina expects the situation to continue in the second quarter,” said the group. ‘On the one hand, FrieslandCampina is cautiously optimistic about the incipient recovery in consumer and out-of-home channels; on the other hand, the Asian baby food market is not expected to recover. ‘

© 2021 European supermarket magazine. Article by Stephen Wynne-Jones. For more fresh produce news, click Here. click subscribe to to register with ESM: European Supermarket Magazine.