ZALTBOMMEL--20 Mar--PRNewswire-AsiaNet/InfoQuest Campina's strategy pays off in milk price Innovations, international growth and efficiency almost fully compensate for the effects of fierce price wars, rising energy prices and strongly declining EU subsidies for owners of the dairy co-operative. Product innovations, profitable growth outside the home market and efficiency improvement: these pillars of the growth strategy of the international dairy co-operative Campina (net turnover + 10 million euro to 3.569 million euro) ensured satisfactory annual results in 2005. Campina again improved its result and almost fully compensated for the strong price pressure in Western Europe, rising energy costs and strongly declining subsidies. The investments in the past years in international growth, innovation and efficiency are bearing fruit. Campina has realised profitable growth in Russia, Greece, Spain and the United Kingdom, among other countries. There were successful innovations in the home market, such as Campina Valess, Campina VlaFlip and Campina Optiwell pudding and a large-scale efficiency operation resulted in structural savings. This performance means that Campina can presenta satisfactory result to its owners, the member-farmers. Higher result -- Campina adds value to milk for its member-farmers. The performance price per 100 kg of milk supplied by member-farmers is therefore the yardstick of Campina's result. Campina realised a performance price in 2005 of 31.32 euro excluding VAT. A slight decline of 0.21 euro (excluding VAT) per 100 kg of milk with the same fat and protein content compared to 2004. Combined with the increase in the EU's individual income compensation of 1.18 euro per 100 kg of milk, milk income for Campina's member-farmers rose. Including the individual income compensation from the EU, Campina managed to offset the income effects of the EU dairy reforms for the second year in succession. Slight increase in net turnover -- Net turnover in 2005 rose to 3,569 euro on, 10 million euro higher compared to the previous year. This, despite pressure on prices in the home market (Germany, the Netherlands, Belgium), the sale of production and logistic activities in Poland and lower cheese production as a result of the fire at the cheese factory in Lutjewinkel at the end of 2004. These developments were counterbalanced by the positive effect of innovations by the Consumer Products Europe group in the home market, the acquisition of Aveve Zuivel, growth in countries outside the home market and turnover growth in the Industrial Products division. Profitable international growth -- Profitable growth of the activities outside the home market and cost reduction measures compensated for the decline in margins due to declining prices and increasing energy and raw material costs. In all the European countries in which it operates Campina is both successful and profitable, despite severe price competition and the rise of private labels. Campina in the Netherlands, for instance, maintained profitability through product innovation, product concentration and other cost reduction measures. Germany remained profitable thanks to various cost savings. In particular the United Kingdom, Russia and Greece proved that previous investments laid the foundation for continuity and future returns: turnover rose sharply and the results clearly showed further improvement. The activities of the Industrial Products group, too, contributed to growth. The Cheese & Butter group grew through the acquisition of milk fat specialist Aveve Zuivel and realised an excellent result. Many product innovations -- Campina again confirmed its reputation as innovator in the year under review. With successful launches in the Netherlands (the meat alternative Campina Valess, Campina VlaFlip and Mona Boordevol), for instance, and in Germany (Campina Optiwell 0.1% fat pudding). The company is also innovative when it comes to dairy products in the 'extra healthy' category. Campina introduced new products to meet the needs of many consumers who have to keep a close watch on their energy intake. Besides Campina Optiwell pudding, other products in this category are Campina Milner Xtra Slimm (cheese)and Campina Buttergold Elke Dag. Another good example of innovative strength was shown by the Industrial Products group, which supplies ingredients that help teenagers overcome acne problems, boost the human liver function or improveblood pressure. Efficiency improvement -- In 2005 Campina considerably reduced its operational expenses. A structrual saving in indirect costs of around 25 million euro was realised. This is largely thanks to the efficiency operation launched in the autumn of 2004 which resulted in a decline in the number of jobs in the year under review, particularly in overhead positions. Campina also realised ongoing efficiency improvements in its factories and professionalised purchasing. Further strengthening of financial position -- The company again strengthened its financial position in 2005. Equity now amounts to 567 million euro compared to 536 million euro last year. Capital base (group equity plus subordinated loans) amounted to 745 million euro in 2005, bringing it to 42.2 per cent (2004: 41.7 per cent). J.J.G.M. (Justines) Sanders, CEO Campina BV on the year 2005: "For Campina 2005 has been a satisfactory year. We are clearly on track. Good commercial results are proof that Campina is performing well when it comes to growth with innovative consumer products in Europe and Asia and with specific dairy ingredients world-wide. We have achieved a good result; despite a difficult home market and a reduction in EU support of more than 50 millioneuro compared to 2004, due to reforms of the European dairy policy." "Distinguishing power in the dairy industry is of vital importance in Western Europe. Campina has the people, the means and the drive to continue to do better. In 2005 we again lived up to our reputation as an innovative company. For the fourth year in succession Campina was the largest brand in Dutch supermarkets. We are well-positioned in Germany with Landliebe, with Campina Optiwell and with the Campina Strudel and Campina Puddis desserts. The percentage of our turnover from consumer products, which we realised with our main brands Campina, Landliebe and Mona, rose to 44 per cent." "Innovations, profitable growth outside our home markets and efficiency improvements compensated for the effects of the fierce price competition in Western Europe and the phase-out of the European dairy policy. We set a target of compensating that part of the price decline not compensated by Brussels, as much as possible. We have been more than successful in doing so. Including the premium from Brussels the milk income for Campina members increased to 1 euro per 100 kg of milk." Outlook for 2006 -- A future decline in the milk price seems unavoidable in the light of choices made by European and national governments. Campina will uphold its objective to compensate the price decline for its member-farmers as much as possible. Campina therefore opts for further cost optimisation, organic growth through innovations as well as acquisition-driven growth in the field of consumer activities in Europe, the Middle East and Asia and for ingredients world-wide. Key figures 2005 2005 2004 Net turnover (x 1 million euro) 3,569 3,559 Performance price in euro per 100 kg (excl. VAT) *) 31.32 31.53 Cash milk price in euro per 100 kg (excl. VAT) *) 30.57 31.03 Investments in tangible fixed assets (x 1 million euro) 150 140 Depreciation of tangible fixed assets (x 1 millioneuro) 84 82 Equity (x 1 million euro) 567 536 Equity (as % of balance sheet total) 32.1 32.1 % turnover consumer products under main brand 44 42 Capital base (group equity + subordinated loans) x 1 million euro) 745 696 Capital base (% of balance sheet total) 42.2 41.7 Average number of employees 6,811 7,099 % employees outside the Netherlands 57 57 Total milk processed (x 1 million kg) 4,823 5,205 Milk supplied by members (x 1 million kg) 3,399 3,422 Average number of member-farmers 8,576 8,794 (*) With the same fat and protein content Note for editors: Campina is an international co-operative company active in the development, production, sale and distribution of dairy and dairy-related consumer products and advanced ingredients for the food and pharmaceutical industries. Campina has an annual turnover over around 3.6 billion euro and some 6,800 employees. The company holds leading positions in the markets in which it operates, with consumer brands such as Campina, Landliebe and Mona. Campina's Industrial Products group operates on a global scale. This ingredients group, with the DMV International division, is a successful partner for the food and pharmaceutical industries, among others. Website: http://www.campina.com SOURCE: Campina CONTACT: Campina Corporate Communication, +31-418-571316 Web site: http://www.campina.com --Distributed by AsiaNet ( www.asianetnews.net )--