Australian food and drinks group Lion has said conditions in the dairy and juice sectors remain “very difficult” after it booked a decline in first-half profits.
The dairy and drinks division delivered EBIT of A$68.3m in the first six months to the end of June, a fall of 43.2% on the year.
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Sales slid 9.4% to A$1.4bn, driven by the loss of key private-label contracts and a decrease in exports due to the impact of the strong Australian dollar.
Lion’s white milk volumes slid 10.9% due to the loss of the own-label contracts.
Nonetheless, Lion said it remains “committed to patient investment in its core strategic assets” to deliver “sustainable growth over the long term”.
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“Lion’s dairy and drinks business is still a long way from achieving an acceptable return on invested capital and continues to face significant margin pressures in both dairy and juice,” the firm said in a trading update on Friday (5 August).
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By GlobalDataIn the six-month period, Lion’s parent Kirin Holdings reported a 0.9% slide in sales to JPY1tn (US$12.7bn). A 6.4% drop in alcoholic drinks sales in Japan, in part a consequence of the earthquake that struck the country earlier this year, outweighed a 27.6% increase in sales at the group’s overseas beverages business.
However, lower selling costs in beer and pharmaceuticals helped Kirin to increase half-year operating profits by 21.7% for the six months, to JPY72.8bn.
Kirin reported JPY16.9bn in earthquake-related charges for the half-year.
