A primary contributor to growth in this division, continued the Dutch dairy group, was the high demand from Asia for dairy ingredients. The business group’s operating profit rose by 53.4 per cent to €89m (as against first half of 2010: 58 million euro).
The group notes that the economic outlook remains uncertain. “In Europe the expectation is that consumers will remain reluctant to spend due to the economic uncertainty and that the consumption of dairy products will remain under pressure."
Moreover, reports Friesland, minor fluctuations in supply and demand on the world market could have major consequences for the price development of dairy products.
Arla Food Ingredients
Meanwhile, looking at other ingredient supplier’s financial results, Arla Food Ingredients (AFI), the newly formed whey processing division of the Scandinavian dairy group, reports a revenue hike of 23 per cent from the first half of 2010 to the first half of 2011.
Factors stimulating growth included the “positive development in world market prices,” said the Denmark-based supplier.
In reporting its financial status, AFI flags up the fact that it will continue to invest heavily in the development of its infant formula protein ingredient - alpha-lactalbumin as well as that of its caseinoglycomacropeptide (CGMP) based Lacprodan CGMP-20-CGMP which can be used in yoghurts and is helpful to people with a genetic disorder known as phenylketonuria.
Meanwhile, Olam International, a global processor of agricultural products and food ingredients, reported a net profit after tax of S$444.6m for the 12 months ended 30 June 2011, a growth of 23.6 per cent compared to S$359.7m achieved in FY2010.
All five business segments including the edible nuts, spices and beans, confectionery and beverage ingredients, and food staples and packaged foods contributed to the growth, said the group.
The confectionery & beverage ingredients segment, continued Olam, registered volume growth of 15.2 per cent, 42.8 per cent growth in gross contribution and 41.1 per cent growth in net contribution compared to FY2010.
The ingredients and commodities player also reports a strong rebound in the cocoa business on the back of normalcy returning to the Ivory Coast after a long period of disruption and political stalemate, with all pending shipments of cocoa stored in its warehouses during the crisis there now completed.
Olam notes that the two acquisitions that are underperforming out of the 27 done so far are its dairy processing investment in New Zealand (OCDL) and its high intensity natural sweetener investment in Malaysia.
“In view of the uncertainity of whether the high milk prices announced by Fonterra for the 2011 season are cyclical (shorter term) or structural (longer term), we have decided to take a prudent one-off impairment of S$35.6m of our original investment in OCDL in FY2011,” added Olam.