Alfresca, the Icelandic-based food group, has reported a strong first quarter with sales and earnings up, despite a challenging cost environment.

In a statement today, the company said that net sales had reached EUR134m, up 20% on the same period last year, with organic sales growth reaching 5%. EBITDA was EUR7.3m, up 108% and profit after tax reached EUR0.8m compared to a loss of EUR1.8m in the same period a year ago.

Xavier Govare, the company's CEO, said: "Our new financial year 2007/08 has started very well even though we are facing exceptional commodity price increases, along with other food producers.

"It is encouraging to see that this good sales performance has been achieved with a balanced contribution from each of our four pillars with sales, on a pro-forma basis, increasing in smoked salmon and fish by 5%, blinis and spreadables by 7% and prawns and shellfish by 4%, with Foie Gras and Duck broadly contributing the same level of sales as last year over a summer period which is traditionally a very quiet period for this pillar."

The company added that the results have been obtained despite two significant adverse factors that impacted Alfesca's performance during the first quarter. First, the poor summer in Europe negatively impacted the sales of its summer range of products, such as its prawn and duck based barbecue lines as well as its spreadables range of products, the statement said.

Second, the company said it had seen "unprecedented increases" in commodity prices, which started to rise during spring 2007. These "significantly impacted the variable costs of our duck related products, as well as our blini and spreadables line of products."
Moving forward the statement said: "Given the fundamental nature of the market changes, we expect that the challenging market conditions and higher raw material prices will continue for the rest of the current financial year and beyond. In response, we have already reacted to the raw material price increases by working with our clients to obtain the necessary price increases in order to recover these additional costs."