Parmalat, the Italian dairy group majority-owned by France’s Lactalis, today (12 September) indicated it is having difficulty passing on rising milk costs to customers.
For 2017 as a whole, at constant exchange rates and the scope of consolidation – and when excluding Venezuela – Parmalat expects its net revenue and EBITDA to grow “within 1%”.
“In some geographic areas, an uptick in the cost of raw milk is creating problems in updating sales terms, due to the policies pursued both by some competitors and by customers, with potentially significant effects on the group’s sales volumes,” Parmalat said.
“In addition, despite the progress made compared with the previous year, some issues in the implementation of programmes planned in the industrial and logistics areas are affecting performance in the third quarter, creating expectations of some delays also in the final quarter of the year.”
Parmalat’s outlook came alongside mixed first-half profit numbers. The company posted a fall in first-half net profit but higher operating earnings.
The company’s net profit dropped 32.6% to EUR14.8m (US$17.7m), which it said was “primarily” attributable to a change in tax laws in Venezuela in the second half of the previous year that “eliminated the tax deductibility of the inflation effect”.
Parmalat’s EBITDA rose 7.9% to EUR185m, helped by exchange rates and the contribution of new assets. Excluding these two factors, as well as its business in Venezuela, the company’s EBITDA inched up 0.5%, “thanks mainly to improvements achieved in Latin America, Oceania and Africa”.
It added: “The increase in profitability reported by the group reflects the positive impact of a partial improvement in operating efficiency and the containment of overheads.”
Alongside today’s publication of Parmalat’s first-half profit numbers, it announced Lactalis executive Jean-Marc Bernier would replace Yvon Guerin as its CEO and general manager. Parmalat had said in July Guerin would step down from the post for personal reasons.