Parmalat improves in difficult first half

- Last updated on GMT

Related tags: Dairy group parmalat, South america, Better, North america

Shrugging off difficult economic conditions in a number of markets,
Italian dairy group Parmalat has reported solid, if hardly
spectacular, results for the first half of the year.

Italian dairy group Parmalat has said it is encouraged by its first half performance in the light of the difficulties facing the world economy. The company improved its position in all 30 markets where it is present, and maintained its overall operating profit at roughly the same level as in the previous year.

Consolidated sales for the first half amounted to €3.9 billion, an increase of €23 million on 2001. Organic volume growth was slightly lower at 2.2 per cent, but organic value growth was 4.5 per cent, the company said. Turnover was hit by the recessions in both Argentina and Venezuela and the depreciation of several of the main currencies in which the group operates - in particular in South America and South Africa.

European sales were up 5.4 per cent to €1.3 billion, driven by solid performances in Italy, Spain, Portugal, the UK and Hungary. New product launches helped the group improve its share of markets which remained essentially stable during the half.

Sales in North and Central America increased by 2.5 per cent to €1.35 billion, and while North American markets remained stable, the company continued to restructure its operations south of the US border, consolidating its market position in Mexico and improving its market leading positions in Nicaragua and the Dominican Republic.

South American turnover slumped 9.1 per cent, however, to €871 million as a result of the currency devaluations and political instability, but there was still much encouraging news, with Brazilian operations remaining stable and markets outside Argentina and Uruguay posting solid volume results.

Sales in the rest of the world (essentially Australia and South Africa) rose 3.1 per cent to €334 million and would have been better still if not for the weakness of the Rand and other South African currencies.

The first few months of the second half have seen a continuation of Parmalat's good performance. In July, an agreement was signed over a strategic alliance with Raiffeisen-holding Niederosterreich-Wien, majority shareholder of the Austrian company Nom, involving the purchase by Parmalat of a 25 per cent stake in the Austrian dairy group for €30 million.

Once the sale is concluded - subject to approval by competition authorities, Parmalat will benefit from improved access for its products both in the Austrian market and in neighbouring markets.

Nom, whose sales amount to €235 million, is a leading operator in the pasteurised milk market in Austria with several strong national brands and leading market positions in production of fruit yoghurt and fresh pasteurised milk. It is also a leading player in the drinking yoghurt market in the EU as a whole.

For the remainder of 2002, Parmalat said that organic volume growth was expected to remain in line with that seen in the first half of the year, although sales in Euro terms were likely to suffer because of continued currency devaluations in South America and elsewhere.

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