US dairy firm LifeWay Foods has seen profits fall during the first half of the year, due to increases in supply, advertising and milk costs.

The manufacturer today (16 August) recorded a net income of US$2.2m for the six months to the end of June, down 25.8% on the same period last year. Lifeway posted operating profit of $4m, compared to from $4.9m a year earlier.

Lifeway pointed to higher transport, milk and advertising costs. Milk costs were between 20% and 25% higher compared to the first six months of 2010, the company said.

However, net sales jumped 21.7% to $35.5m. The growth was largely due to increased sales of the company’s newly launched Frozen Kefir line, the company said.

Lifeway CEO Julie Smolyansky said: “We are extremely pleased with our ability to continue to realize record sales results as we capitalised on the opportunity to increase customer awareness and further increase our retail distribution with our 25th anniversary mobile tour and the launch of our frozen kefir.”

Commenting on the company’s outlook, Smolyansky added that Lifeway expects to achieve “record sales” in 2011.

“We will continue to manage the controllable aspects of our business as we take advantage of the tremendous opportunity to expand distribution in the US and internationally with Lifeway’s leading market position which should lead to strong sales, profitability and cash flow generation long-term.”