Valio Group’s turnover was €1,734 million (1,709), which means a growth of 1.5 percent compared to the previous year. Net sales in Finland grew by half a percent, and net sales abroad grew by 3 percent. Our milk margin was €800 million (797) and our milk return was 38.4 percent per litre (37.9).
The situation on the global milk market, however, remained challenging. Supply exceeded demand, which reflected in the prices for both Finnish and export sales. It was a challenging year for Valio’s owner-entrepreneurs: milk prices fell and the summer was record-setting hot and dry.
Valio and four other dairies reached a settlement in late 2018 and early 2019 in a compensation process regarding base milk pricing. One-off compensation pay-outs resulting from this process were a burden on Valio’s operational profits.
Says Valio CEO Annikka Hurme: “The greatest challenges arise from the dairy industry’s operating environment. Global milk production continued to grow, and last year we saw that weather conditions can have a significant effect on production conditions, both in Finland and around the world. The feed shortage resulting from the record-dry summer was an additional burden on the farms’ financial situation,”
In the Finnish market, Valio’s turnover grew by roughly half a percent compared to the previous year, which is a good performance in a tight competitive space. This growth was supported by the successful development in our product portfolio as well as a strong supply chain.
From a renewal and innovation perspective, 2018 was strong. In February 2018, we launched our plant-based Valio Oddlygood products in Finland and Sweden. In March, Valio returned to the ice cream market with its Valio Jäätelöfabriikki premium ice creams after a 14-year break. In summer, we renewed our Valio ProFeel range of protein products and introduced numerous new protein snacks. Of our more traditional categories, basic milk products continued to along a downward trend, consistent with market trends.
Our foreign operations produced a turnover of €669 million (649). Valio’s growth continued especially in Sweden, the Baltics, Russia, and China.
Continued Hurme: “In 2018, our turnover in Sweden grew by 10 percent thanks to added-value products, such as lactose-free products. Our turnover growth in the Chinese market was also strong. Valio remains an unknown brand in China, and it takes time to build recognition and create profitable growth. In Russia and the USA, we are focusing on improving operational profitability. Development in these markets in 2019 has remained along those lines.”
Since the beginning of 2018, we began paying a sustainability bonus of one cent per litre of milk to dairy farmers that commit to, among other things, planned and preventive animal healthcare with a veterinarian.
The Intergovernmental Panel on Climate Change (IPCC) report, released in late 2018, brought global warming and the means to mitigate it to the forefront. In October 2018, Valio set an ambitious climate goal: we want to cut milk’s carbon footprint to zero by 2035.
Source: ValioAuthor: COX