Briefs: Parmalat, Dairy Crest and Dean Foods
settlement is on the cards, while dairy groups Dairy Crest and Dean
Foods report mix fortunes in dealing with rising commodity costs.
Parmalat denies further settlements Parmalat has denied reports in the Italian media suggesting it is on the verge of settling two court cases with banks alleged to have played a role in its 2003 financial collapse, while under a previous management structure. The group said yesterday that reports claiming Parmalt was on the verge of settling disputes with the Unicredit group and the Bank of America over their alleged role in its bankruptcy were "unfounded". The Italian dairy giant's fall created one of Europe's largest financial scandals when the company, under a previous administration, defaulted on more than €14bn in debt in 2003. Under the current leadership of administrator Enrico Bondi, Parmalat has subsequently worked to stave off efforts by an Italian banking conglomerate to disintegrate the group. This has led to the company pursuing various legal proceedings in Europe and the US against banks allegedly involved in having knowledge of the fraud. In September, the company settled disputes with Graubuendner Kantonalbank and Credit Agricole Indosuez out of court for the sum of €20.7m and €2.63m respectively. Parmalat posted financial assets totalling €58.9m during the first financial half of this year as a result of these proceedings. By comparison, in the company's 2006 full year results, the group posted net debts of €170m. Net gains of €237m from legal settlements with financial institutions allegedly linked to its bankruptcy were highlighted as the key factor in this turnaround. Dean Foods profits drop Increased third quarter sales for US-based dairy group Dean Foods failed to translate into improved operating profit as the group struggled with record commodity prices. The company's revenues were up 24 per cent to $3.1bn for the three-month period ending 30 September, though operating profit fell by 63 per cent to $103m over the same space of time. Group chairman Gregg Engles said the company has been forced to face unprecedented challenges in costing during the period and struggled to offset them. "In the third quarter, we were faced with the most difficult operating environment in our history," he said. "Raw milk prices rose rapidly to record highs and we were challenged to increase our pricing fast enough to keep pace." Though revenues for the group's dairy segment alone were up by 26 per cent to $2.8bn during the quarter, the average Class I mover, used by the group to indicate raw milk costs, recorded an average 95 per cent increase on prices over the same period last year. Due to these costs, the company said that the quarterly operating income for the segment had fallen by 26 per cent to $137.3m, compared to 2006. Dairy Crest delivers despite commodities costs UK group Dairy crest managed to defy the effects of rising commodity costs on its operations through price increases and greater investment, the company said yesterday. Group revenue was up by 29 per cent to £761.4m for the six-months ending 30 September. Operating profit was up by 21 per cent to £37.1m over the same period, with operating margins declining marginally by 0.3 percentage points to 4.8 per cent. Group chief executive Mark Allen said that the strong performance of the company's core brands like Cathedral City and Utterly Butterly, combined with product innovation were behind the sales growth. "Most of our key pillar brands including Cathedral City, Country Life Spreadable, Utterly Butterly, St Hubert Omega 3 and Petits Filous are performing strongly," he stated. "In addition we are making good progress with healthier variants of some of these brands." Allen added that the strength of Dairy Crest's brands alone were not sufficient to ensure continued profitability with the company as a result also reviewing its pricing structure over the period."Whilst market conditions are challenging, we are implementing price increases across most dairy categories to reflect higher raw milk costs," he added. "The group's expectations for the full year remain unchanged." Besides price increases, the company said that the expansion of its St Hubert in France, and investment at its UK cheese packing plant in Nuneaton were expected to ensure continued profitability in the future.
