The group, which reported a 23 per cent fall in operating profits, to €153m, on sales down . 3 per cent at €4,575m, said that currency movements had affected its profits, by some €35m. The group has no operations in the US, but the weakening of the dollar impacted its businesses in regions pegged to the dollar.
In addition, the poor performance of its pension fund's stock market investments had prompted the company to reinvest €30m back into its pension programme - thus pushing up operating costs.
However, it was an excess supply of cheese in that had affected its underlying performance. The oversupply of milk in Europe led to more cheese production just as the llevel of price support for cheese was reduced as part of the reform of the EU's Common Agricultural Programme (CAP). This caused a widespread fall in cheese prices.
Speaking to the Dairyreporter the group's spokesperson, Rob Van Dongen, said "In general the oversupply of milk is pushing cheese production up and the mid term review of the Cap Reform is having an affect on European cheese prices".
In a drive to reduce its dependency on non-branded products, including cheese, the company is now prioritizing the development of its brands. It also stressed the significance of its increased sales last year of added value products. Value added products, including coffee milk and desserts, were responsible for 44 per cent of the group's turnover in 2003.