Shares in Australian dairy group National Foods took a tumble today [Friday] following disappointing first half profits leading to a dilution in full-year profit forecasts.

Net profits in the first half to December climbed 12.5% to A$25.08m (US$12.97m), but this failed to match market expectations of A$27m. Managing director Max Ould said the group expects a marginally stronger second half, but analysts commented that initial market estimates could have been too high.

Accordingly, stock fell some 5.6% to A$3.02 in early afternoon trading, although this is still substantially better than its low of A$1.83.j

The group is currently looking to move its revenue stream away from the declining milk industry towards value-added products such as premium cheese, yoghurt and flavoured milk. To this end, the group is in the process of buying Melbourne speciality cheesemaker King Island Dairy for A$77m. It also has the licence to distributed Yoplait yoghurt through much of Australasia, and has agreed to buy the franchise for China.