Spain's Ebro Foods has reported mixed first-quarter financial results, with underlying net profit up but EBITDA falling due to the lag between costs rising and success in increasing prices.

The company on Friday (29 April) reported net profit from continuing operations of EUR32.3m (US$47.9m), up 9.6% on the first quarter of 2010.

Ebro's reported net profit was down 20.2% at EUR32.2m but the company said the figure in the first quarter of last year included contributions from its dairy business, which it agreed to sell to Lactalis last March.

The EBITDA from Ebro's rice and pasta divisions fell, leading to a 4.5% drop at a group level to EUR63m. Ebro pointed to the lag in getting the prices on its products increased to help offset rising raw-material costs. The company also pointed to EUR24m of investment in advertising.

Ebro said it expects margins to improve in the second half of the year through price increases and the launch of new products.

The company's turnover increased 1% in the first quarter to EUR426m.

Meanwhile, late last week, Ebro cleared an important hurdle in its bid to buy Australian rice business Ricegrowers after the country's Foreign Investment Review Board approved the deal.

Ricegrowers, which trades as SunRice, is planning to put the deal to its shareholders in the coming weeks.