FrieslandCampina plans to save up to €500m annually from 2026 as part of new business strategy

06 Oct 2023 --- FrieslandCampina unveils its plan to improve profitability and business margins and target sustainable growth following its Expedition 2030 plan. The company will also double its whey protein isolates production capacity at its Borculo, the Netherlands, facility.

As part of its 2030 initiative, the company will save €400 to €500 million (US$421.6 to US$527.2) annually starting from 2026.

However, there will be restructuring and job losses.

“Our goal is clear: produce top quality products from our members’ milk and, by doing so, generate maximum value for them. Income that our members need to continue investing in the sustainable future of their farms,” says Jan Derck van Karnebeek, CEO at Royal FrieslandCampina.

“That is why it is so important that we structurally improve our business performance,” he highlights.

The implementation of the Expedition 2030 plan will begin in 2024. FrieslandCampina will announce the organizational implications and associated one-off restructuring costs in mid-December.

Nonetheless, job cuts had already been announced beforehand. FrieslandCampina will make job cuts to optimize its butter production, moving it to Lochem, in the Netherlands, by mid-2025. Moreover, the company sold part of its German dairy operation to focus on high-performing brands.

Sharpened focus
According to the business, significant savings will arrive starting in 2024. The cost savings will be widespread as RoyalCampina says that “the entire company has to reduce costs,” with the main focus on the support function.FrieslandCampina recently sold part of its German dairy operation to focus on high-performing brands.

“Our sharpened strategy with a focus for each business group on specific customers, products, brands and markets will significantly improve the way we work and compete. Combined with a competitive supply chain and lower overhead costs, I am convinced that Expedition 2030 will strengthen our position as a leading, innovative and sustainable player in the dairy industry,” Derck van Karnebeek explains.

“This is important for FrieslandCampina to remain attractive to its member dairy farmers, employees and customers, now and in the future,” he notes.

Additionally, to further boost competitiveness, the company plans to become a “global leader” in proteins and probiotics. Aiming to meet the growing demand for “high-quality ingredients for the sports and infant nutrition markets” through the Borculo facility expansion.

Moreover, sustainability is also in focus, as the company aims to produce net climate-neutral dairy by 2050 at the latest.

Fighting inflation
Part of the annual savings “will be needed to offset inflation,” according to the company. The remaining margin expansion is divided equally between investing in sustainable growth and increasing the company’s net profit.

According to the UN Food and Agriculture Organization (FAO), dairy commodity prices had declined for nine consecutive months in September and are 23.9% lower than last year. International prices across all dairy products fell, notes the FAO.

“International prices across all dairy products declined in September, principally underpinned by lackluster import demand for spot- and near-term deliveries amidst ample stocks in leading producing regions, despite an upsurge in demand towards the end of the month for some dairy products in Southeast Asian countries,” the FAO details.

Edited by Marc Cervera

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