The dairy giant Tine warns of reduction of plants and jobs
The Norwegian dairy giant Tine is struggling with dropping sales and weak income growth in several areas. The dairy farmers cooperative must now reduce both the number of production facilities and employees. Tine is world renowned for its flagship: the Jarlsberg cheese.
Operating profit for Tine ended at NOK 269 million in the third tertial last year, down from NOK 356 million in the same period the year before. Profit before tax was NOK 229 million, compared with NOK 309 million in 2017.
The annual results are virtually unchanged from 2017 if we view 2018 as a whole, though.
Despite somewhat higher operating revenues overall, there is a continuing volume decline in the large dairy categories of regular milk, yoghurt, cream and sour cream that worries the board. The board has now ordered their newly hired CEO, Gunnar Hovland, to turn the negative trend around.
Tine has approximately 5,400 employees at 31 production facilities. Some of the facilities must shut down, according to Hovland.
“I don’t know how many we end up with, but when we look back in a few years time, it will be fewer than today,” he tells Dagens Næringsliv.
A plan for the strategy is underway. It will both increase growth and reduce costs by an unknown figure.
Amongst the grips that are already being implemented are efficiency improvements in the cheese production. Tine can significantly reduce annual costs by concentrating yellow cheese and specialist production at fewer facilities than today. According to the plan, the board will make decisions on a future production structure before the summer.
“I have a great understanding that many of our employees will now feel insecurity in relation to their jobs in the future, but we will take care of each and every employee to provide as much security as possible. We have done this many times before, with good results,” the company asserts.
- The volume decline of milk was 4.7 per cent last year.
- Yoghurt sales fell by 4.1 per cent in litres.
- Sales of sour cream decreased by 3.4 per cent.
- The tropical summer contributed to the Diplom-Is increasing revenues.
- Flavoured milk, such as chocolate milk, increased 12 per cent.
- High protein products in the Yt series increased by 65 per cent.
- Juice increased by five per cent.
- Sales of Jarlsberg outside of Norway increased by 10 per cent.
© NTB Scanpix / #Norway Today