Wimm-Bill-Dann, the Russian dairy-to-baby food group, has insisted that it sees a bright outlook for its dairy business in 2010, despite the profit warning it issued for 2009 today (25 January).
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Milk shortages during the last quarter of 2009 led to lower sales and tighter margins for the business and prompted a cut in its EBITDA forecast for the year.
A Wimm-Bill-Dann spokesperson said the Russian dairy sector had suffered from shortages in dry milk due to government regulations on how milk products can be labelled – and restrictions on imports from neighbouring Belarus.
Russian law on milk labelling went into force at the end of 2008 and order that milk with protein levels below 2.8% or containing dry milk must be labelled “milk drink.”
With Russian consumers shying away from buying the “milk drink” products, dry milk processors cut production this summer, leading to shortages for dairy groups like Wimm-Bill-Dann.
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By GlobalDataHowever, the Wimm-Bill-Dann spokesperson insisted the company saw the shortage of dry milk as a “one off” and that the business was confident of an upturn in dairy sales in 2010.
“It affected our margins and sales in the fourth quarter of 2009 but the whole of 2009 was pretty good,” the spokesperson said. “For next winter, producers will be more prepared for any dry milk shortage and will store more in the summer.”
