Scandinavian dairy group Arla Foods posted a DKK238m (US$40.8m) profit in the first half of 2006, which was below expectations due to the consumer boycott of Danish goods in the Middle East earlier in 2006.

Arla added that sales have now returned to pre-boycott levels in most Gulf States, with the exception of Saudi Arabia, the company’s largest market in the region. Domestic sales remain sluggish, albeit with a slight increase.

Arla Foods group finance director Jørn Wendel Andersen said: “Reports from the market confirm previous expectations that Arla Foods faces a loss of earnings in the region of DKK 400m (US$69m).”

Earnings were in line with the forecast at the start of the Middle East crisis in January 2006.

The boycott of Arla in the Middle East was in reaction to controversial cartoons of the prophet Mohammad, published by a Danish publication in 2005.