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Asian milk powder demand drove €120m Q4 deals: GEA

By Mark Astley+

10-Jan-2014
Last updated the 10-Jan-2014 at 14:50 GMT

Asian milk powder demand drove €120m Q4 deals: GEA

Increasing Chinese and Asian demand for dairy products afforded GEA €120m ($163m) worth of orders from European processors in the last three months of 2013 alone, the German processing technology manufacturer has revealed.

Dusseldorf-based GEA announced yesterday that it was awarded contracts totalling €120m by customers in the dairy sector in October, November and December 2013.

Speaking with DairyReporter.com, Axel Wolferts, head of investor relations at GEA, said that increasing Asian demand for dairy products, in particular milk powder, is driving manufacturers to invest in the expansion of their production capacity.

“We see more European processors setting up new plants in Europe to meet this increasing demand from China and Asia,” said Wolferts. “It’s mainly on the back of milk powder demand from Asia.”

“That’s why a number of our customers, in New Zealand and Europe particularly, have been adding production capacity to their plants.”

New projects

Among its Q4 orders, GEA pinpointed its €70m ($95m) contract to supply Dutch dairy giant, FrieslandCampina, as the most significant.

Through its deal with FrieslandCampina, GEA will supply equipment to convert milk and other ingredients into skim milk powder, whole milk powder, skim milk concentrate and powdered infant formula - covering “the complete production process from reception, pre-processing, concentrating, drying and packing."

This trend is, however, "nothing new" for GEA, said Wolferts.

“It’s a trend that really began in the last couple of years."

"GEA managed successfully to pick up a number of projects in 2013 from leading processors worldwide,” he said. “But this is nothing new for us. It is a trend that we have observed for a period of time.”

"Stable project pipeline"

GEA recently completed one of its major Asia-driven projects of 2012.

In December 2013, New Zealand-based dairy exporter Fonterra opened “the world’s largest milk powder dryer” at its processing site in Darfield, New Zealand. The €70m ($95m) dryer, which was designed and build by GEA, has the capacity to produce up to 700 tonnes of whole milk powder per day. Milk powder produced using the new dryer at Darfield will be exported to countries in the Middle East, China and Southeast Asia, said Fonterra.

Looking ahead to 2014, Wolferts said that GEA expects Chinese and Asian demand for milk powder and other dairy products to continue to drive sales.

“At the moment, we see it staying like this, and for now we have a stable project pipeline," he added.