US dairy firm Lifeway Foods has booked higher first-quarter revenues and earnings, although the company said oil costs weighed on margins.

In the three months to the end of March, Lifeway generated net income of US$1.9m, up from $1.8m a year earlier. Operating income was up 19% at $3.3m.

Lifeway’s sales also rose 19% to $19m due to higher sales of its flagship cultured dairy product Kefir, its kids line ProBugs Organic Kefir and new product lines, including Bio Kefir.

Nevertheless, Lifeway’s gross profit margins dipped by 100 basis points due to “increased prices of transportation and other petroleum based production supplies”.

However, Lifeway said the cost of conventional milk – its largest raw material – fell 5%, with Kefir no longer part of the US Department of Agriculture’s Class I milk classifictaion.

Julie Smolyansky said yesterday (13 May) that Lifeway expects “2011 to be a record year of sales and profitability”.

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