Dutch dairy group FrieslandCampina has seen half-year profits fall as earnings in Europe slumped.

The Netherlands-based processor reported that profits fell to EUR127m (US$180.9m) in the first six months of 2011, down from EUR156m in the same period last year.

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Operating profit also slipped from EUR238m in the first half of 2010 to EUR210m this year.

FrieslandCampina said its European consumer products division only broke even in the first half of the year after an operating profit of EUR57m a year ago.

The company’s sales of consumer brands in Europe rose 6% thanks to higher selling prices. Volumes, FrieslandCampina said, were flat. FrieslandCampina said the “stagnation” in consumption in Europe led to increased competition and meant higher raw milk costs could only be partially passed on.

However, the increase in dairy commodity prices also helped the business, with sales from FrieslandCampina’s ingredients unit up 16.1%. The increase helped its total net revenue increase 9.3% to EUR4.7bn, which also benefited from growing sales volumes of consumer products in Asia and Africa.

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CEO Cees ‘t Hart said: “We are especially satisfied with the development of the results of our ingredients activities.

“The developments in Asia and Africa were also positive. In the majority of markets and product categories we succeeded in passing on the higher raw materials costs and increasing volumes.

“In Europe we have had a more difficult time. There is no growth in consumption and consumers remain extremely susceptible to low prices and product promotion campaigns.”

The first-half report also sounded a note of caution regarding economic stability, especially in Europe. The company said: “Minor fluctuations in supply and demand on the world market could have major consequences for the price development of dairy products. Partly due to this, FrieslandCampina cannot make any concrete statement regarding the expected result for the whole of 2011.”