First Half Improvement But Bongrain Still Underperforming
Although Bongrain has significantly improved profitability and sales in the first half of 2010 compared to the corresponding period in 2009, the results are still below the French and international dairy group’s historic level of performance. Bongrain reported an increase in net profit from Eur13.2m to Eur37.3m in the first half of 2010 on net sales up by 4.1% on a like-for-like basis to Eur1.66b, thanks to the improvement in world prices for industrial products and despite the fact that the strong pressure on selling prices for the group’s major brands limited the positive impact of their sustained volume sales. However, Bongrain has warned that the improvement will not be maintained in the second half.
Current operating profit was Eur65.1m against Eur45.9m in the first half of 2009 with the increase being chiefly attributable to improved competitiveness as well as the enhanced performance of industrial products. The positive trend in Bongrain’s results was amplified by the reduction in non-recurring expense and by the fall in interest charages reflecting tight control of net borrowings.
The results are compared with a weak first half of 2009. Indeed, Bongrain has cautioned that for 2010 as a whole, it will not be possible to maintain the level of improvement in performance achieved during the first half of 2010. The outlook for the world markets in industrial products remains uncertain and a 10% increase in the price of milk, which has been agreed within the French dairy industry, will necessitate an increase Bongrain’s selling prices.
