Italy-based dairy group Parmalat boosted full-year earnings through raising prices to offset soaring milk powder costs.

The company saw underlying EBITDA rise 8.6% to EUR367.1m (US$531m) in 2007, as price hikes drove a 9.1% increase in revenue to EUR3.9bn.

"An aggressive pricing policy designed to offset the impact of higher raw material costs, a shift in the product mix toward items with greater value added, an increase in manufacturing and operating efficiency and successful marketing programs are largely responsible for these improved results," Parmalat said yesterday (7 February).

Sales and earnings in Italy and North America, Parmalat's two key markets, rose.

However, in Australia, higher prices and a shortage of raw milk hit the company's profits from the market. Parmalat said own-label dairy producers in Australia gained as brand-owners sought to raise prices to cover costs.

"All market operators were forced to cover the higher raw material costs by increasing sales prices," the company said.

"This approach caused a reduction in demand and created an opportunity for private labels, which were able to raise prices less than other market players."