French dairy company Bel Group, the maker of Boursin cheese, saw sales turn around in the second quarter but warned of a tough economic environment ahead after profits sank.
After declining in the three months through March, the company’s sales bounced 17% in the second quarter, leading to a 14.9% rise in the first half of 2017 to EUR1.7bn (US$1.9bn), according to its financial results published on 28 July.
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However, the company’s net profit dropped 24% to EUR85m.
The consolidation of France’s Mont-Blanc Materne, which Bel acquired last autumn, helped drive revenue, with the second quarter showing “strong momentum, fuelled by higher selling prices in European and American markets”, it said. The company also noted swings in foreign exchange had a negative impact of 0.4 percentage points and so organic growth came in at 1.2%.
Bel’s operating income slid 19.7% to EUR133m, with the margin hit by slower volumes in the Middle East and Greater Africa, it said.
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“Raw material prices, particularly butter fat raw material prices, are expected to rise in the markets. Further, the group will continue to confront a tough economic environment with little visibility over the trend in its activity. Against this backdrop, the group expects operating margin to be lower in the second half of the year versus the prior year.”
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By GlobalDataThe company attributed the poor performance in the Middle East and Africa to a drop in people’s purchasing power for those countries that depend on raw material exports. The region’s dairy market “contracted” significantly”, it said.
European markets also slowed amid “fierce” competition among retailers and a sharp increase in milk and dairy raw material prices.
The company noted in the statement that its subsidiary Fromageries Bel Production France sold its Clery-le-Petit plant in France’s Meuse department to US-based Schreiber Foods on 1 July.
The Clery-le-Petit production site makes pressed cheese marketed under the Cousteron and Port-Salut brands. As part of the deal, Bel signed a subcontracting agreement with Schreiber to continue the production and supply of the products.
