Finland's Valio Group has reported a 1 per cent drop in sales to €513 million for the first four months of 2003 compared to the same period last year, due entirely to the sale of its US cheese unit, McCadam, to Agri-Mark in January 2003.

The dairy company said that domestic sales were 1 per cent higher than in 2002 at €345 million, but the 3 per cent decline in international sales to €168 million, caused by the disposal, meant that overall turnover was down.

Valio said that in volume terms, exports rose by 2 per cent, with sales of cheese and butter rising at the expense of ingredients. There was also an increase in the contribution from Valio's various subsidiaries, with only the US sales unit marking a decline, due to the weakness of the US dollar.

Operating profits were down 45 per cent to €7 million, while pre-tax, pre-exceptional profits were down by the same amount to €6 million. The company said that extraordinary items of around €14 million (related to the McCadam sale and plant closures) would impact its full-year performance.

Olavi Kuusela, Valio's CEO, said that the company also bought 3 per cent less milk from its owner co-operatives in January-April than in the same period last year, although the procurement share of Finnish dairy milk volumes remained the same.

"Valio Group's financial position remains good," said Kuusela. "Investments under the production development programme will increase total investments for 2003 to around €100 million."