Annual Report 2023

Royal FrieslandCampina N.V. Contents “A team achievesresults when it isboth diverse andworks together”CEOJanDerckvanKarnebeek OurEnvironmental,Social andGovernanceimpact Expedition 2030:increasingprofitability andsustainable growth 3This is FrieslandCampina 3Dairyfromgrasstoglass4FrieslandCampinaworldwide5Ourworldwidedairy6FrieslandCampinain20237Expedition203011AwordfromtheCEO,JanDerckvanKarnebeek15InterviewwithSybrenAttema,ChairmanoftheSupervisoryBoard 42 11 19Report of the Executive Board 202023Developmentsandresults23Thedairymarketin202325Dairyfarmingtrends26Financialnotes28Resultsbybusinessgroup30Valuecreationformemberdairyfarmers312023Keyfigures32Howwecreatevalue342023Sustainabilityhighlights42ESGstatements75Riskmanagement852024Outlook86Managementstatement&StatementofExecutiveResponsibility 115Financial statements117Consolidatedfinancialstatements203Individualfinancialstatements210Otherinformation 211Auditor's reports211Independentauditor'sreport226Independentauditor'sassurancereport 229Overviews 230Financialhistory231Milkpriceoverview232CompositionoftheSupervisoryBoard234CompositionoftheExecutiveTeam 87Corporate governance87Corporategovernance 236Appendices237GRITable 96ReportoftheSupervisoryBoard104Remuneration114Taxes 244Explanatorynotes Dairy from grass to glass 14,634Member dairy farmers A leading dairy company 20,928Employees (FTEs) FrieslandCampina is a large international dairy company with acooperative history dating back more than 150 years. The companyprocesses milk into a wide range of dairy products and ingredients.Royal FrieslandCampina N.V. is fully owned by ZuivelcoöperatieFrieslandCampina U.A., with 14,634 dairy farmers in the Netherlands,Belgium and Germany as members. Through the cooperative,these member dairy farmers jointly own the company. It all starts with the cow The cow’s health and welfare are the basisfor high-quality milk. Day after day,FrieslandCampina’s member dairy farmerslook after their cows and young livestockand work on sustainable farmingoperations. FrieslandCampina worldwide Top 10 consumer brands Based on revenue in euros FrisoInternationalFrisian FlagIndonesiaDebicInternationalDutch LadyAsiaPeakNigeriaCampinaNetherlands and BelgiumAlaskaThe PhilippinesRainbowMiddle EastForemostThailandOlper’sPakistan Top 5 ingredients Excellion(caseinate)Pharmatose(pharmaceutical lactose)Vivinal GOS(galacto-oligosaccharides)Hyvital(hydrolysate)Infant nutrition base powders FrieslandCampina in 2023 Sustainability results Financial results 13,072Revenue12022: 14,076-7.1% Greenhouse gas emissions4on member dairy farms(Scope 3 – member milk)2022: 10,82310,359-4.3% 588-9.4% Greenhouse gas emissions4from production and milk transport(Scope 1 & 2)2022: 649 46.26Guaranteed price22022: 55.21-16.2% 75Operating profit12022: 471-84.1% -149Net result12022: 292-151.0% 48.08Milk price32022: 57.35-16.2% 96% 91% Responsible sourcing oftraceable raw materials2022: 94% Recyclable packaging2022: 91% Performance price32022: 58.6945.49-22.5% For all figures and explanations,see Key figures 2023 and ESG Report. 75% 29% Percentage of womenin senior managementpositions2022: 28% Product composition52022: 72% Expedition 2030 In2023,FrieslandCampinainitiatedExpedition2030,acomprehensivestrategicprogrammewiththeobjectiveofremakingthecompanyintoaleadingdairycompanyforitsmemberdairyfarmers,employees,consumers,customersandotherstakeholders,nowandforgenerationstocome.Thestrategy,focusingonspecificcustomers,products,brandsandmarketsforeachbusinessgroup,combinedwithacompetitivesupplychainandloweroverheadcosts,willreinforceourpositionasaleading,innovativeandsustainableplayerinthedairyindustry. We are in a good startingposition with a strongreputation, relevant purposeand much experience withdairy” Our purposeNourishing by natureis leading Formorethan150years,FrieslandCampinahasbeenmakingadifferenceinthelivesoffarmersandconsumers.Ourpurpose,Nourishing by nature,standsforbetternutritionfortheworld,agoodlivingforourfarmers,nowandforgenerationstocome,andistheforcebehindallourchoices.Weprovidenutritionofthehighestquality,aimforapositiveimpactonpeopleandtheplanetandfindthebestusageforthemilkofourmemberdairyfarmers. Jan Derck van KarnebeekCEO, Royal FrieslandCampina N.V. A single ambition, a single goal To provide the world withhigh quality nutrition To have apositiveimpacton the planet To find thebest usagefor member milk Leading as a companywith a focus on dairy Leading milk price formember dairy farmers Ourstrategyisfocusedonoptimallyvalorisingthemilkofourmemberdairyfarmerstoenableustopayaleadingmilkprice.Inotherwords:tomaketopqualitydairyproductsfromthemilkofmemberdairyfarmerssothatwecangeneratemaximumvalueforthem.Ourmembersneedthisincometo investinthesustainablefutureoftheirfarms.Ourstrategyischaracterisedbyaspecificfocusforeachbusinessgrouptogetherwithanappropriatecoststructureandisorientedtowardsimprovingprofitabilityandstimulatingsustainablefuturegr