Ukrainian dairy group Ukrproduct has seen its first-half gross profits slip by 3% to GBP4.6m (US$8.55m), despite a 7.7% growth in sales.

Profits were hit by global commodity pricing in skim milk powder (SMP) and a poor performance from its SMP unit, the company said.

However, the group remained upbeat on its outlook with sales growth driven by a particularly strong showing from its branded businesses.

First-half sales increased from GBP21.9m for the comparable period of last year to GBP23.6m this year. Branded sales jumped 50.6% year-on-year to GBP16.3m.

"Ukrproduct has delivered strong growth in branded products' revenues and gross profits in the first half of 2008. In line with our stated strategy we continue to focus on branded products, including processed and hard cheeses, and packaged butter," CEO Sergey Evlanchik said.

"Looking forward, we expect sales in our core branded products, soft cheese and packaged butter, to continue growing at the same rate as in the first half."