Emerging market sales drive Parmalat H1 profit increase

By Mark Astley

- Last updated on GMT

Related tags: South america, Africa

Emerging market sales drive Parmalat H1 profit increase
Italian dairy giant Parmalat has reported a 7.8% increase in net profit for the first half of 2012, with improved emerging market sales and profit boosts from its core markets driving the increase.

The firm, which is owned and controlled by French dairy firm Lactalis, saw revenue increase by 6.1% to €2.2769bn ($2.803) during the six month period – a €130m ($160m) increase on the €2.1469bn ($2.643bn) recorded H1 2011.

Parmalat has attributed the revenue increase to higher sales from its African, Russian and Australian divisions and improved margins from its Italian and Canadian dairy divisions.

The Parma-based company reported consolidated EBITDA of €163.3m ($201m) – a 9.4% increase on the €149.3m ($183.7m) for the same period of 2011.

Parmalat spokesperson Fabio Caporizzi told DairyReporter.com that in “this current environment, to have a result like this is a double win for us.”

Caporizzi added that in future, the firm could be forced to rely on these emerging markets to prop up ailing West European dairy demand.

Emerging market performance

“There are some regions where we are really performing at the moment. For instance, we are seeing strong performances in Australia, Russia and Africa,” ​said Caporizzi.

Parmalat’s Australian division reported revenue of €460.1m ($566.2m) for the first half of 2012 – a 15% increase on H1 2011. EBITDA rose to €22.3m ($27.4m) compared with the €13.5m ($16.6m) earned last year.

The firm has attributed the result to increasing demand for its flavoured milk and yogurt offerings.

The firm’s rest of Europe division, which includes subsidiaries in Portugal and Romania, recorded €6.5m ($8m) in EBITDA for the January to July period – driven by strong performance in Russia.

Parmalat also has a presence in several Africa countries, including Mozambique, Zambia, Botswana, Swaziland and South Africa – where it has established a leading position in the cheese and flavored milks market.

“We are confident that this sales trend will continue in Russia, Africa and Australia and that dairy demand in these regions will help us meet the targets set by the board as in the first half of the year,” ​added Caporizzi.

Future growth

Elsewhere, South American EBITDA fell to €11m ($13.5m) from €17m ($20.9m) in H1 2011. Parmalat has attributed this to the “challenging conditions”​ faced by its Venezuelan subsidiary.

Parmalat strengthened its position in this South American market and made its first venture into the US earlier this year, through the acquisition of Lactalis American Group (LAG). Caporizzi expects that in time, these regions could provide the “strong results” ​needed to offset the European consumption crisis.

“Currently we are suffering in some South America countries due to difficult market conditions. But, it is an important area of focus for us. We expect to get strong results from this region in the near future,”​ he said.

Related topics: Manufacturers, Emerging Markets

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