The French Lactalis, world leader in dairy products, presented its annual results from Boston, in the United States, yesterday, Thursday, May 5th. We must remind you that the French agri-food giant is a multinational with 85.5000 employees operating worldwide (52 countries) with approximately 270 locations.
“There is a crisis in production costs” (+3 billion more)
The central theme that emerged from this presentation of the results was “Production cost crisis”. Lactalis boss Emmanuel Besnier actually explained that the increase in prices paid to breedershis explosion plastic costs (packaging) or its difficulties transportwould cause increase its costs by about 15% this yearand that this will have an effect on shelf prices.
“There is a crisis in all production costs, either raw materialsfrom’packagingfrom logisticswhich we have to pass on to the consumers “, the boss of the family group, Emmanuel Besnier, explains to the French Agency, on the occasion of the presentation of the annual results.
Lactalis, the world’s leading dairy group under the brands President, Galbani and Parmalat in particular, saw a significant increase in costs in the second half of 2021 and provides for a total of € 3 billion in additional charges.
Fertilizers, food … the war in Ukraine increased the costs of farmers
The average price of milk that Lactalis pays to farmers on all its websites worldwide has already grown by 4.7% in 2021. In France alone it increased by 5% to 382 euros per thousand liters.
It has risen even more since the beginning of the year with the war in Ukraine, which in particular has pushed up the cost to farmers, from fertilizer to animal feed.
Food producers, who reached an agreement on March 1st with distributors predicting a 3% increase in the prices of many products sold in supermarkets, are again in negotiating table in order to be taking into account the latest increases in production costs.
In the face of a possible rise in prices on the shelves, “we know that there will certainly be an arbitration problem for some consumers regarding their purchases,” Mr Besnier said.
Following the pandemics associated with the pandemic in 2020, “We hoped for a return to normalcy, with ups and downs, in 2021”explains Thierry Clément, business director.
People “did not restart” as expected
But people “did not restart” as expected, between supply disruptions, lack of shipping containers, etc., and prices began to rise from the summer.
“The differences between our selling prices and the buying prices have been strongly negative since the end of 2021”, indicates.
The turnover in particular, which is supported by the year-end integration of Leerdammer cheeses in the Netherlands and Kraft in the United States, increased by 4.2%to 22 billion euros.
But the company could not immediately pass on the increased costs to customers and operating profit fell slightly to 1.17 billion euros. Net profit increased by 4% to 445 million euros.
Lactalis would anticipate some of Danone’s advantages
During the presentation of his annual results for 2021, Emmanuel Besnier was also asked about the rumors about the acquisition of Danone’s rival, an even more imposing giant (e.g.In 2021, its turnover had reached 24 billion euros, increased by 3.4%). Emmanuel Besnier did not want to expand on the issue, he just admitted the lip service he could “you may be interested in Danone as part of its portfolio review” and so shows his interest in certain brands, but not enough to start a takeover bid in the group …
This market rumor started on Wednesday, April 20th Letter A said the agro-food group Lactalis would consider partial or total acquisition of Danone’s competitor (which no doubt had contributed to the 8.65% jump in Danone shares that day at the end of the morning, even if the announcement of better -The turnover of the first quarter of the expected and the annual goals maintained by the agri-food giant were also related …).
However, reacting to this rumor from La Lettre A, Antoine de Saint-Affrique, the new general manager of Danone, who was appointed last September, assured on Tuesday 26 April at the annual shareholders’ meeting that the French agri-food group did not plans to sell any of its three companies (dairy and vegetable products, baby products and bottled water).
“The portfolio of our categories is growing because it is in line with consumer expectations. “We have no intention of leaving, regardless of the rumors,” said Saint-Affrique.
However, despite these denials, the article was published on April 20 in the financial newspaper The letter a shows that the unlisted French dairy company Lactalis has been considering for months a possible full or partial acquisition of Danone. And that Danone would have instructed Rothschild CEO Olivier Pécoux to look into the matter.
“Lactalis consultant Perella Weinberg Partners is considering scenarios for partial or total acquisition of Danone. The operation would be complicated for Emmanuel Besnier’s group, which has a lower turnover than that of the agri-food giant. Danone is led by Olivier Pécoux, Rothschild’s CEO in Paris. Wrote Letter A on April 20.
(with AFP and Reuters)