Commenting on the results, Hein Schumacher, CEO, Royal FrieslandCampina N.V. said: 2022 was in many ways again an extraordinary year. Consider, for example, the elimination of the corona measures, the nitrogen debate, the war in Ukraine, the energy crisis and above all the high inflation that has hit everyone hard in the chain, producers, retailers, and consumers. Primarily due to high inflation, the results of our consumer activities in the Food & Beverage business group were under pressure as we were unable to fully pass on the huge cost increases to our customers. However, this was more than offset by the excellent results achieved by the Specialised Nutrition, Ingredients and Trading business groups and by the strong results of the new Professional foodservice business.
On balance, we can look back on significant revenue and profit growth for FrieslandCampina in 2022. We also achieved a historically high-performance price of 58.69 euros per 100 kilos of supplied milk, including a supplementary cash payment in the amount of 0.90 euro. In 2022, the total amount paid to member dairy farmers was over 5.4 billion euros: a record pay-out.
Positive progress was made on the sustainability agenda in 2022. First, we published our climate plan and achieved further reduction in greenhouse gas emissions. Furthermore, we also made significant progress in making our packaging reusable and recyclable. To be able to further reduce greenhouse gas emissions in the future, we have started various pilots together with member dairy farms and strategic partners; for example, relating to livestock feed and circular barn systems. We also made significant investments in making our production processes, installations and distribution networks more sustainable. But we definitely are not there yet, and we are expecting an additional investment of approximately more than 1.5 billion euros until 2030 in sustainability.
2022 also marked the end of our 150-year anniversary, which was appropriately concluded with the short film ‘A New Day’, our tribute to generations of FrieslandCampina dairy farmers.
I would like to sincerely thank all member dairy farmers, employees and partners for the enormous effort in 2022 that they have put into achieving the results and making FrieslandCampina more sustainable and future-proof.”
In the fourth quarter of 2022, market conditions became less favourable and a sharp decline in commodity dairy quotations started. The negative impact of this on fourth-quarter results is expected to continue in 2023. The impact will be significant in the first half of the year. Besides the negative impact of these commodity dairy quotations on profitability, market conditions are expected to become more difficult as reduced consumer purchasing power in many markets will put volumes further under pressure.
Clear priorities have been established for 2023. There will be more focus on product and brand innovation to continue to meet consumer and customer demands and expectations. Plans therefore provide for higher investments in research and development (R&D), primarily focused on better nutrition and more sustainable production and packaging. In addition, FrieslandCampina will continue to invest in the marketing of its brands and in the Professional business to achieve growth there.
Sustainability will continue to be one of the pillars of FrieslandCampina’s strategy and business operations, with a primary focus in 2023 on greenhouse gas reduction through the climate plan and on sustainable packaging. Increasing biodiversity will be part of the 2023 sustainability priorities. Lastly FrieslandCampina will also continue to invest in its production network, for example in new, more sustainable production facilities in Indonesia and Malaysia.
In 2023, some interest-bearing borrowings will expire, FrieslandCampina expects to refinance these. For more visit frieslandcampina.com