Italian dairy group Parmalat said today (4 March) that its profits dropped by almost 10% during 2008 and would fall again this year amid the global downturn.
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The company posted EBITDA of EUR330.6m (US$416.6m) for 2008, a fall of 9.8% on the year. Parmalat said EBITDA for 2009 would range between EUR310m and EUR320m.
Sales grew 6.9% to EUR4.13bn as Parmalat increased prices to offset higher raw material costs.
However, Parmalat said sale volumes in the West were hit by growing private-label consumption, while the economic crisis also affected sales in emerging markets.
Sales in Italy rose by 3.2% to EUR1.09bn, although higher raw milk costs meant Parmalat’s domestic earnings fell 4.9% to EUR111.4m.
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By GlobalDataThe strength of the euro weighed on results from Parmalat’s overseas operations. Parmalat’s biggest market is Canada where it saw sales rise 4.9% to C$2.16bn.
When measured in euros, Parmalat’s Canadian revenues fell 1.3%. When measured in Canadian dollars, earnings were flat at C$199.2m. In euros, EBITDA was down 6.7% at EUR127.8m.
Strong competition from private-label products and rising raw milk costs weighed on Parmalat’s Australian business, which posted EBITDA of A$48.1m on 2008 – down from A$61.6m a year earlier. In local currencies, Parmalat’s revenues in Australia rose 6.2% to A$775.9m.
Looking ahead, Parmalat said there would be “heightened competitive pressure” on retail prices in mature and emerging markets.
“In most cases, increasing list prices will be difficult, while maintaining sales volumes will require the widespread use of promotional and advertising programmes tailored to take into account the levels of competitive pressure that exist locally,” Parmalat said.
