Lion Nathan National Foods has reported a fall in revenue at its Australian dairy unit, as lower consumer spending and the milk price war among Australian supermarkets hit sales.
LNNF, a subsidiary of Japanese conglomerate Kirin Holdings, said that National Foods, the group’s dairy and juice unit, saw revenue fall 11% to A$729.8m (US$788.3m) in its first quarter to the end of December. Fresh milk volumes were down 11%.
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Chief executive Rob Murray said rising interest rates and power costs, increased saving and ongoing economic uncertainty had reduced consumer spending in Australia and New Zealand.
The business’s margins came under significant pressure in the period, Murray revealed, with deep discounting by supermarkets on private-label fresh milk reducing returns across the supply chain.
“In the current year, National Foods’ return on invested capital is now expected to be well below an acceptable level,” Murray warned.
Kirin, LNNF’s Tokyo-based parent, posted a net loss of JPY2.11bn (US$26.3m) on Friday (6 May), compared with a year-earlier profit of JPY6.16bn, as profits were hit by disruption to its domestic brewing business following the tsunami and earthquake that hit Japan during the period. Sales climbed 10% to JPY488.92bn, the company said.
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By GlobalData
