French dairy giant Groupe Bel has admitted its margins will fall this year after raw-material costs hit its first-half profits.

Bel, which makes brands including Boursin and The Laughing Cow, posted a 39.9% drop in net profit to EUR54m (US$78m) for the six months to the end of June. Operating income was down 35.5% at EUR90m.

The company saw its sales rise 4.7% to EUR1.22bn but said higher commodity prices meant profits were lower.

Bel’s sales increased in three of its regions – western Europe, the Americas and Asia Pacific, which the company groups together, and Africa.

However, sales in the Middle East were hit by what Bel described the “international geopolitical environment”. Revenues from Eastern Europe fell in the wake of the sale of Czech business Jaromericka in November.

Bel said it did not expect trading conditions to improve in the second half of the year. Raw material prices, it said, were expected to remain “high”. The company also pointed to “very turbulent” economic and financial conditions and “an unpredictable geopolitical situation”.

“Against this unfavourable backdrop, the group will continue efforts to ensure volume growth, defend market share, further its policy of selective price increases, and strengthen plans to improve operating performance,” Bel said.

However, it added: “The group does not expect to see a recovery in operating margin in H2 2011 and anticipates a decline for the full year versus 2010.”