The Dutch dairy products and fruit drinks group Friesland Foods has reported an 8% profit rise for 2005 to EUR104m (US$123.9m), on sales down 1% at EUR4.4bn.

The company attributed the profit rise to improvements in the financial performance of its cheese operations as a result of restructuring and rationalisation, and higher margins in Southeast Asia. Operating profit increased by 12% to EUR211m, while operating profit as a percentage of revenue (ROS) increased from 4.2% to 4.8%.

However, the company said its results were adversely affected by a weaker Indonesian rupiah as well as a squeeze on margins caused by continued price competition in Western and Central Europe.

"Although we have not yet reached our targeted profit level, we are nevertheless proud of our achievements," said the company's president Luc Dahlhaus. "The year was characterised by a difficult market, high costs of raw materials and increasing energy prices; in Europe in particular, we had to contend with fierce pressure on margins due to competition among retailers.

"Nevertheless, Friesland Foods managed to improve its results, specifically in the second half of the year, thanks to our efforts to further strengthen our brands, rationalise the product range, professionalise the organisation and cut costs where production, procurement of raw materials, packing materials and services are concerned."

Romania, Greece, Nigeria, Vietnam, Thailand, Hong Kong and Malaysia had developed well, the company said, but conditions were not as favourable in the Netherlands, Hungary and Slovakia due to the continuing consequences of price competition and the strong growth of private labels in these countries.

Revenue from key brands, such as The Peak, Bonnet, Dutch Lady, Frisian Flag and Foremost, which are marketed in Africa and Asia in particular, grew relatively strongly. Friesland added that enhanced nutrition varieties of these brands were a major contributing factor to the growth.