Royal FrieslandCampina’s revenue surged by 10.7 percent to 6.1 billion euros in the first half-year 2017.
Profit rose by 1.3 percent to 162 million euros. Revenue increased due to an increase in sales prices and the acquisition of Engro Foods in Pakistan.
The pro forma milk price for member dairy farmers increased by 26.9 percent to 38.37 euros per 100 kilos of milk. The interim pay-out for member dairy farmers amounts to 1.17 euros per 100 kilos of milk.
Roelof Joosten, CEO of Royal FrieslandCampina N.V.: ‘The milk price for member dairy farmers recovered this year after a number of disappointing years. The higher sales prices for primarily butter and cheese lie at the root of this recovery.
In West Europe we were successful in passing on the higher guaranteed price in the sales prices. This is reflected in the increased revenue.
The total compensation paid to member dairy farmers increased by 24 percent in comparison to the first half year of 2016. High growth levels were realised in Indonesia and Vietnam, and with cheese and butter.
In Germany, the Philippines and Nigeria, result trends are not as positive due to local market conditions and negative currency translation effects, the latter particularly in Nigeria.’
The increase in revenue to 6.1 billion euros is due to the increase in higher sales prices of 10.3 percent, and the acquisition of Engro Foods in Pakistan at the end of 2016 of 2.4 percent.
On balance, currency translation effects had a negative effect of 53 million euros (-1.0 percent) on revenue.
The volume of products with higher added value declined by 1.6 percent (exclusive of the acquisition of Engro Foods) and the volume of basic products rose by 1.2 percent.
On balance, this had a negative mix effect of -1.0 percent on revenue. Butter products displayed the highest price increases due to the increased global demand for butter and cream products with a declining supply.
The operating profit leaped by 7.8 percent to 275 million euros over the first half of 2017. Currency translation effects had a negative effect of 13 million euros on the operating profit.
The gross margin increased by 8.2 percent to 1 billion euros due to the fact that the higher sales prices compensated for the increased costs. The cost of goods sold increased by 11.2 percent to 5.1 billion euros. This is mainly due to the higher guaranteed price for raw milk and the increased prices for other raw materials.
The total compensation paid to member dairy farmers for their milk increased by 24.1 percent to 2.1 billion euros (2016: 1.7 billion euros), at a 1-percent-lower milk production level (5,435 million kilos).
