Arla, the European dairy group, has reported a 19% fall in half-year profits amid the decline in global dairy commodity prices.
The company booked net profit of EUR122m (US$138.2m), down 18.7% on the EUR150m it generated in the first half of 2014.
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Revenue dropped 3.8% to EUR51.8bn. CEO Peder Tuborgh said Arla's sales were in line with expectations and insisted the co-operative was "doing everything we can to minimize the effects of the general global market situation".
He said: "We have mitigated the impact of the negative market by directing the increasing milk volumes into retail and branded products, consequently limiting the amount going into less profitable commodity products. However, it cannot change the fact that our farmer owners are in a tough situation right now."
Arla chairman Åke Hantoft added: "2015 has proven to be a very challenging year indeed for dairy farmers – both in Arla and elsewhere. The current earnings do not cover the costs of milk production, which is a heavy challenge for us farmers and our individual businesses. In the past year Arla has been working very actively to buffer the market situation without damaging our market positions. This proves that we have the right strategy, however no strategy can remove the current world market slump."
Tuborgh said Arla had reduced investments by 30% and was to "streamline the organization vigorously and control costs".
"Our ambition is to achieve total savings from cost programmes of EUR330m before the end of 2015 compared to 2012 and we are on track to do," he said.
The company said it had "achieved a volume-driven revenue growth" of 2.4% from its three global brands – Arla, Lurpak and Castello.
Alongside the results, Arla announced fresh investment in Africa with ventures in Nigeria and Senegal.
