Dairy and juice group National Foods has failed to meet its calendar 2007 profit forecast of A$170m (US157.2m), the Australian Financial Review reported.

Volumes rose 3%, while sales rose 9% to $2.3bn in the year ended 31 December as National Foods increased prices to recover higher costs, the Review said.

Earnings were reportedly weighed down by commodity and transport price rises of between $130m and $140m.

"We have had to adjust our cost structure," chief executive Ashley Waugh told the Financial Review.

He declined to reveal the exact profit generated by the company which was acquired by Japan's Kirin Holdings in December.

Waugh told the Review, demand from coffee shops and cafes had been extremely strong, and that house brand milk, such as that sold by Coles and Woolworths, had so far had little impact on the route trade.