Lactalis is already feeling the impact of the Middle East conflict as the French dairy giant warned it may be forced to increase prices.
The privately-owned business issued the advisory after reporting its 2025 annual results yesterday (16 April), with group revenue rising 2.9% to €31.2bn ($36.8bn). Net income climbed to €528m from €428m in 2024.
Lactalis, the world’s largest dairy company, outlined the supply challenges in a statement sent to Just Food today (17 April) amid uncertainty whether the two-week ceasefire agreed between the US and Iran will be extended beyond the original expiry on 22 April.
“The conflict in the Middle East, the duration and intensity of which remain uncertain, is already having significant repercussions on rising transport, energy and packaging costs,” Lactalis said.
“We anticipate a risk of economic imbalance for an industry whose margins are already extremely low. We therefore wish to reopen pricing discussions in order to find a fair balance between taking these cost increases into account and limiting their impact on consumers as much as possible.”
In yesterday’s results statement, Lactalis said it booked a profit margin of 1.7% in 2025, up from 1.2% in the previous 12 months.
“As a result, profitability continues to progress toward the group’s target of returning to a 2% margin, ensuring continued capacity to invest,” the Laval, Pays-de-la-Loire-headquartered business, said.
Regionally, Lactalis said it reached a “significant milestone in the Americas” last year as revenue rose above €10bn linked to the acquisition of General Mills’ yogurt business in the US. That deal was struck in 2024.
The transaction “marked a strategic turning point” in the region, the company added.
Earlier this month, Lactalis finalised the acquisition of New Zealand-based dairy peer Fonterra’s consumer-facing assets as that business instead focuses on ingredients. The deal was first initiated last year.
The deal represents the equivalent of €2.85bn in revenue, Lactalis said yesterday.
“This transformative transaction marks a major step in the group’s development. It opens up new growth opportunities in Oceania, South and South East Asia, and the Middle East, leveraging the complementarity of two strong and well-established brand portfolios,” Lactalis added.
Lactalis chairman Emmanuel Besnier said: “2025 marks a key milestone in our growth trajectory: we are strongly consolidating our position in the Americas while opening new horizons in Oceania and Asia to secure new growth drivers guided by a simple conviction: because dairy products are healthy, enjoyable and accessible, they remain at the heart of day-to-day nutrition for families.”
