Blog: Dean BestBreaking down the numbers...

Dean Best | 6 September 2007

A raft of financial results have been announced in the last 24 hours – with dairy group Friesland Foods and US food group Campbell Soup Co. taking centre stage.

On the face of it, Friesland Foods, the Dutch dairy group, published a set of robust figures, proving that the soaring cost of dairy commodities is of benefit to some in the industry.

As well as producing a raft of consumer brands, Friesland Foods supplies dairy ingredients to food processors and, as the cost of ingredients like milk powder has risen, so have the prices Friesland charges from its customers.

Nevertheless, Friesland Foods sounded something of a warning on the rest of the year. It refused to give an earnings forecast for the second half of 2007, blaming uncertainty over the full impact rising dairy costs could have on its customers. Indeed, if dairy prices remain buoyant, Friesland volumes could take a hit. (Insert your own “cheesed off” gag here).

For Campbell, its results highlight the good sense of making a move into the emerging but challenging markets of Russia and China now. The US firm booked healthy annual profits and sales, giving the company cash to really push on its quest to conquer the world’s two largest soup markets.

One notable element of Campbell’s results was the continued good performance of Godiva, the upmarket chocolate business the company could soon put on the block.

Godiva’s sustained growth in markets like Asia is by no means a slight on Campbell’s insistence that the business doesn’t fit its strategy. That’s for the company to decide. However, the success of Godiva serves to underline what a sweet acquisition the business could be for the likes of Nestlé or Lindt.


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