News briefs: Nestle, Saputo and Parmalat

By Neil Merrett

- Last updated on GMT

Related tags Dairy farmers Milk Ice cream

This week, Nestle and Saputo publish their latest financial results, with dairy playing a crucial role for both companies, while Parmalat faces a setback over its proposed plans to expand in Australia.

Ice cream and nutrition drive Nestle growth

Nestle’s milk and ice cream brands proved to be one of the key growth drivers over the first fiscal half of 2008 as sales rose by 8.9 per cent on an organic basis to €32.6bn.

The company said that it posted organic sales growth in all of its operations, with the exception of its bottled water division, as operating profit increased by 6.1 per cent to €4.4bn for the six-month period ending June 2008.

Operating margins for the half were also up by 0.3 percentage points, despite a 1.9 percentage point increase in cost of goods sold, according to the group.

Group chief executive officer Paul Burke said that Nestle’s move towards becoming a nutrition and wellness company, particularly in food and beverage production, would help it to realise full year profitability.

"Nestle's drive to become the world's recognised leader in nutrition, health and wellness, its strong billionaire brands and its focus on speed and discipline in execution have allowed the company to further accelerate its performance under difficult economic conditions," ​he stated. "I am therefore confident that 2008 will be another year of delivering the Nestle model, with organic growth at least at the 2007 level and a further improvement in [profitability]."

Of its operations, difficulty in its bottle water operations on the back of higher output costs and recent environmental criticisms resulted in a 1.1 per cent decline in segment sales on an organic basis.

However, growing demand within its nutrition segment and for added-value ice cream products helped push sales growth over the period, the company said.

Saputo profits on US drive

Saputo says that first quarter sales for the 2009 financial year were up 11 per cent to CN$1.3bn (€812m).

The Canada-based company added that growth within its US dairy production operations had helped push operating profit up by 17.9 per cent to CN$150.3m (€93.6m) for the three-month period ending 30 June this year.

Operating margins for the period were also up by around 0.7 percentage points to 11 per cent as the group benefited from increased pricing, higher revenues in its Argentinean domestic and export operations and cost efficiency drives in its Canadian production.

Saputo said that the performance had mainly driven by its expansion of its dairy products operations in the US.

The acquisition of the activities of Alto Dairy Cooperative on 1 April 2008 and a higher average block market per pound of cheese explain the revenue increase,”​ the group stated.

Parmalat pulls out of Dairy Farmers coop talks

Parmalat has pulled out of discussions with Australia-based cooperative Murray Goulburn over a potential joint bid for rival Dairy Farmers.

Reports had suggested that the two companies would look to split up Australia-based Dairy Farmers’ operations should a bid have proved successful, though Parmalat said in a statement that it was unable to finalise terms with the potential partner and had called at end to talks.

Just last month, National Foods and Warrnambool Cheese and Butter Factory were given approval to move ahead with a joint bid for Dairy Farmers by Australia’s competition watchdog.

National Foods, which itself is owned by Japan-based Kirin Holdings, had agreed too offload two milk processing plants and license off some of its major brands to obtain permission, according to the Reuters agency.

Dairy Farmers has a number of operations from specialty cheeses and yoghurts to soy products and juices.

Related topics Manufacturers Nestlé

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