Meat processor Campofrio reported a decline in net profit during the first quarter of 2011 on the back of higher raw material costs.

The company said yesterday (11 May) that net income fell to EUR2.8m (US$3.9m) against EUR3.9m in the same quarter of the previous year on the back of a 2.9% increase in raw material costs.

EBITDA also declined over the quarter, falling 11.3% on the prior year, down to EUR30m, while EBITDA margin stood at 7.1%, 0.9 percentage points lower than the same quarter of 2010.

The processor said that for the quarter, sales were flat at EUR424m, which it said it achieved despite a "very challenging environment" with a "weak consumption environment".

Smithfield Foods is currently looking to take a majority stake in the group. The US meat giant said in early April that it was in talks with Campofrio chairman Pedro Ballve over a possible joint bid worth EUR9.5 a share.

They are discussing whether to make an offer for the remaining 50% stake in Campofrio, giving Smithfield an 87.5% stake in Campofrio.