Oils and fats market hardens

Hardening competition in the vegetable oil industry saw margins cropped for Swedish oils and fats company Karlshamns​ in the first half of 2003. The group stressed that overall results were knocked by 'a tougher economic climate and weakening dollar'.

Sales for the company rose by 5 per cent from SK1,574 million for the first six months of 2002 to SK1,656 million for the same period in 2003. But operating profit dropped over the same time frame, falling by 3 per cent from SK102 million from January to June 2002 to SK99 million for the same period in 2003.

Figures for the Oils & Fats unit of the Swedish company reveal that operating profit fell from SK68 million for the first six months of 2002 to SK63 million from January to June 2003. In the second quarter the company bore the brunt of one of its largest customers, Carlshamn Mejeri, relocating its production operations in Finland. The move had an impact on operating profit, as did higher energy costs.

On a positive note, Karlshamns said in a statement this week that the acquisition of Rasio's industrial margarine - now in the oils and fats unit - and the establishment of a Polish subsidiary are 'developing well indeed'.

But growing competition and decreasing margins currently characterise the market for chocolate fats designed to replace cocoa butter, added the company.

Karlshamns, like other suppliers of cocoa butter replacers, remains cautious about the impact of the new 5 per cent rule within the chocolate industry, due to come into force in the autumn of 2003.

The new EU directive allows other vegetable fats to replace up to 5 per cent of cocoa butter in products marketed as 'chocolate' in the EU. But the company will have hopes for its new cocoa butter replacer introduced earlier this year. CBR Akopol LT 15 product has a trans fatty acid content reduced by 70 per cent.

In May this year Karlshamns acquired the technical oils operations of Aarhus Olie.