Ukrainian dairy group Ukrproduct said sales volumes remained low in the first quarter of 2009 as a result of a partial shift in consumer demand from processed to hard cheese.
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In a trading update ahead of its first half results, the company said its expects its net profit for the period to be “substantially lower”, compared to the corresponding period in 2008.
The group said it anticipates its full year 2009 net results to be below 2008.
Sales volumes remained seasonally low in the first quarter and Ukrproduct experienced a further decline in sales of its branded products segment in April and May.
“Ukrainian hard cheese producers responded to weak domestic demand by cutting prices and releasing the surplus of products into the market. The price differential between hard cheese and processed cheese has narrowed leading to a partial shift in consumer demand from processed to hard cheese resulting in an adverse impact on Ukrproduct’s hard and processed cheese production and sales volumes as well as profit margins,” the company said.
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By GlobalDataPackaged butter sales volumes and profit margins however, were above management expectations. Skimmed milk powder production and export sales volumes exceeded management forecast, but the segment’s profit margins “significantly decreased” due to a further increase in energy costs.
Ukrproduct said it remains “confident” that it will work through the market challenges and continues to see “significant opportunities” in its domestic and export markets over the long term.
