French food group Fleury Michon has reported a decline in first-half turnover and said higher raw-material costs will put pressure on its half-year operating profit.

Fleury Michon, which warned in April its operating profit could fall in 2017, said on Thursday (20 July) it expects to see a “significant decrease” on that metric for the first half of the year amid a “higher-than-expected” increase in input costs, mainly, it added, for pork.

The company said that significant decrease means it expects to report a first-half operating loss. It added it expects to book a “slightly positive” first-half net profit.

In the first six months of 2016, Fleury Michon generated operating income of EUR13.3m (US$15.5m), down 13.6% on a year earlier. Its net income in the first half of 2016 was EUR8.9m, up from the EUR8.2m it generated a year earlier, with the business booking a fall in tax expenses.

The warning on profits came alongside Fleury Michon posting a 3.3% fall in first-half revenue to EUR359.8m. In the second quarter, the company’s revenue declined 2.8% to EUR182.1m.

Sales to French supermarkets, the bulk of Fleury Michon’s business, dropped 3.8% to EUR302.9m. Fleury Michon said sales of products sold under its namesake brands slid 2.5% to EUR290m. It pointed to a sluggish supermarket sector in France.

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By GlobalData

The company’s international division reported a 3.9% fall in revenue to EUR26.8m as sales in Canada were affected by the non-renewal of a foodservice contract.

Fleury Michon’s catering division posted a 3.1% rise in revenue to EUR30.1m.