First half 2020 revenue stable, profit under pressure from corona pandemic

• Revenue stable (+0.3%) at EUR 5.6 billion. On a comparable basis, operating profit down 17.2% and profit down 37.2% versus first half of 2019.
• Results under pressure from corona pandemic, most notably due to a strong decline in out-of-home sales, lower basic dairy prices and a fall in infant nutrition sales in Hong Kong due to closed borders with China. This was partially offset by higher profit for Consumer Dairy and Ingredients.
• Milk price for member dairy farmers decreased by 3.5% to EUR 36.59 per 100 kilos of milk due to a decline in basic dairy prices.
• Milk supply increased by 1.1% to 5,144 million kilos due to favourable weather conditions.
• Global recession with an anticipated slow recovery necessitates further intervention in cost structure and structural improvement of productivity.

Hein Schumacher, CEO Royal FrieslandCampina N.V.: “The corona pandemic has created extraordinary market conditions in the first half of 2020. In many countries, lockdown measures forced people to stay at home and hotels, restaurants, bars and other out-of-home outlets shut down. Basic dairy prices fell sharply but certain costs rose, for example for transportation and shipping containers. In this unprecedented situation, our member dairy farmers continued to supply their milk, which was collected on time and processed in full at our production locations. We have also always delivered our products to our customers in these challenging months. We have worked hard and diligently on all this. For this, I would like to thank our member dairy farmers, employees and business partners from the bottom of my heart."

The company has rapidly adapted to a new situation of “business as unusual”.

Hein Schumacher, CEO Royal FrieslandCampina N.V.

"We started 2020 well with results above last year, but this changed in mid-March due to the corona pandemic. As a result, FrieslandCampina felt the financial impact of the corona pandemic in the first half of 2020. Our total revenue stayed virtually the same, but we saw a shift from the profitable out-of-home segment, where revenue mostly fell away, to sales growth for basic dairy products where prices and profit margins dropped significantly due to the corona crisis. Revenue for the profitable infant nutrition business in Hong Kong also declined as a result of the closed borders with China.

Despite taking numerous, far-reaching measures to absorb the impact of the corona pandemic on our results, unfortunately our operating result and profit still came under pressure due to the global corona crisis in the first half of the year.

However, I also see positive developments: the company has rapidly adapted to a new situation of “business as unusual” as we have come to call it at FrieslandCampina. There is an enormous focus on the primary process, on the production and distribution of our products and we are making huge strides with further digitization and e-commerce. Finally, we recently strengthened our market positions in Ingredients worldwide and in key consumer markets such as China, Indonesia, Nigeria, Pakistan and our home markets the Netherlands and Germany.

Looking ahead, we must now assume that we will enter a global recession in 2020 and that recovery will take time. This necessitates us to further intervene in our cost structure and take measures to structurally improve our productivity. However, we will also continue to invest in our brands, innovations, sales channels (such as e-commerce) and growth markets. This combination should ensure that we emerge stronger from this challenging period.”