Valio net sales jump 4.3% despite challenging market

FINLAND – Valio, the Finnish dairy manufacturer closed the 2017 financial year with 4.3% increase in net sales to US$2.10billion for the group after being able to pay the co-operatives a steady milk price despite unfavourable conditions in some of the markets.

Apart from entering new consumer markets, Valio was able to introduce more than 100 new products and maintained a positive growth trend in added value products both in Finland and in exports.

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In the year, the company continued to deliver on its expansion strategy, including the opening of a US$199 million Riihimäki snack plant with annual production capacity of 120 million kilograms in a way to expand into reduced sugar recipes.

It also made extensive engagement in quality and production reforms involving securing the vitality of rural Finland and the dairy farm livelihood, locally produced food, and animal wellbeing.

Net sales in the domestic market remained flat while those in the international increased 12.4% with strong growth in Sweden, the Baltics, Russia and China despite of challenging milk market.

“The biggest challenges come from the dairy industry’s operating environment. The imbalance of the global markets continues, and the growth in milk production is expected to outpace the demand for dairy products,” said Valio’s CEO Annikka Hurme.

Milk return, always a profitability index was affected by low price of milk powder and drop in price of industrial butter, a situation it expects to continue because of the high volume of EU milk powder intervention stocks.

The EU case and global overproduction of milk may force Valio to make changes to productivity which may impact productivity since 35-40% of Valio’s raw milk is made into powder and butter.

Valio said growing exports from Finland was a preference as there was a downward trend in consumption of dairy products in the Finnish market.

“Accessing new export markets and achieving profitable growth requires us to invest in personnel and marketing in the upcoming years.

There are no shortcuts to accessing new export markets; it’s a matter of going through the regulatory permit processes as well as the long-term building of recognition,” added Hurme.

It remains committed to responsible operations by stepping up communications around product safety, supply reliability and animal welfare to promote sustainability.

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