Demand for catering products declined, basic dairy prices fell, and dense borders meant that much of the infant food sales in Hong Kong fell. The profit from consumer dairy products did increase. The brand products in particular performed well, with Friso as the highlight. Despite the corona, that brand was able to improve its position in China.
Dairy price drops
“The corona pandemic has led to market conditions in the first half of 2020 that we have never seen before,” said Hein Schumacher, CEO of FrieslandCampina. “Basic dairy prices fell sharply, but certain costs, such as for transport and sea containers, for example, rose.”
Member dairy farmers of the dairy cooperative saw the milk price fall by 3.5%, € 36.59 per 100 kilos. This lower milk price is the result of a fall in basic dairy prices.
For the whole year, FrieslandCampina expects a major negative impact from the corona pandemic and an extremely slow recovery. The dairy company will therefore cut its own meat considerably. Costs must be reduced considerably and the productivity of the company increased. The associated restructuring costs will also negatively impact earnings in the remainder of 2020.
Fewer dairy farmers
FrieslandCampina also expects the increase in scale among dairy farmers to continue in the coming years. In an interview with the FD, the chairman of the Supervisory Board said that the number of dairy farmers will decrease from about 15,000 to 10,000 in the next ten years. Milk production will decrease by about 10% in the same period.
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