According to European Supermarket Magazine, FrieslandCampina has stated that it experienced a challenging start to the year due to "difficult market conditions" caused by high inflation and declining volumes, as well as a sudden drop in dairy commodity prices at the end of 2022.

During this week's members' council meeting, CEO Jan Derck van Karnebeek and CFO Hans Janssen confirmed the group's concerning outlook for 2023, which was first published on February 21 of this year.

High Inflation

The outlook highlighted the challenging market conditions and significant decline in dairy commodity prices in the last months of 2022, which continued into the first half of 2023.

The Dutch dairy cooperative stated that in the Netherlands and large parts of the world, consumer purchasing power had been weak due to persistent high inflation levels, resulting in lower volumes.

FrieslandCampina also warned of cost increases due to high energy and raw material prices, rising labor costs, the impact of unfavorable exchange rates, and increasing interest rates.

Lower Market Price

The cooperative mentioned that the guaranteed price paid by FrieslandCampina for delivered milk to its members decreased at a slower pace in the first half of 2023 compared to dairy commodity prices.

As a result, stock products that were produced at higher cost prices had to be sold at a lower market price.

FrieslandCampina stated that the performance of its Food & Beverage and Trading business groups was "under pressure" as a result of this situation.

On the other hand, its Specialized Nutrition and Ingredients business groups had a good start to the year, the company said.

Under Pressure

In a statement, FrieslandCampina said, "The expected reduction in the difference between the guaranteed price and dairy commodity prices means that no additional negative impact is expected in the second half of the year due to inventory revaluation.

"However, due to inflation and a continued decline in consumer purchasing power across all markets, volumes are expected to remain under pressure. Interest rate developments and currency risks remain uncertain factors in the second half of 2023."