Bel flags jump in dairy raw material prices

Bel flags jump in dairy raw material prices

Bel Group has said that rising raw material prices at the end of 2016 have set the stage for challenging trading conditions in 2017. 

In a trading update this morning (1 March), the French cheese maker noted: "Raw material levels remained at very low levels during most of 2016." However, the company continued, it witnessed a "sharp reversal of that" in the fourth quarter, "signalling a much tougher 2017". 

Despite higher input prices in the back half of the year, Bel, which owns brands including The Laughing Cow, said that it expects its 2016 full-year operating margin to remain "in line" with its first-half result. For the first six months of the year the group booked a near-18% increase in operating profit

Full-year sales, however, came under pressure from currency exchange in the period, declining 0.4% on a reported basis to EUR2.9bn (US$3.1bn). Organic sales, stripping out the contribution from the Safilait acquisition and forex, fell 1%. Lower sales in Bel's Europe and the Middle East and Africa reporting regions, which declined 3.3% and 1.5% respectively, offset growth in the Americas and Asia Pacific, where sales increased 5.2% in the 12 months to end-December. 

The company is scheduled to report its full 2016 results next week.