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Headlines > Market Trends

Aarhus sees improving sales in first half

01-Sep-2004

First half sales at Aarhus United fell 3 per cent, eroded by price competition in bulk oils, but improved volumes, particularly in Mexico, and reduced costs helped it generate solid operating profits.

Revenue at the Mexico unit was up 32 per cent during the first six months to DKK322.3 million (€43.3million) while volumes in the US and Denmark, its biggest unit generating DKK761.3 million for the period, also rose by and 13 per cent respectively.

Aarhus also benefited from a reduction in raw material of 5 per cent during the period compared with last year.

 

The Danish firm is under pressure to improve efficiency following a disappointing 2003, with profits hit by lower demand from the food industry for bulk oils and intensifying competition. In April this year it announced job cuts at its marketing office and closure of its shipping department.

 

Sales at its UK operations continued to fall however, down 5 per cent on the previous year's first half, although by the second quarter the company had increased the profits generated by supplies to foodservice while bulk oils declined - despite increased volumes, price competition is eroding profits from this sector.

 

Overall, however, operating profit more than doubled to reach DKK118.5 million up from 51.2 million the previous year, with the sale of silos in Denmark and land in the UK contributing a significant DKK28.7 million to this figure. The previous year's first six months also included a DKK25 million loss after its withdrawal from Norway's Maritex.

 

The rest of the DKK20 million profits were derived from improved sales volumes although Aarhus has urged a cautious outlook for the rest of the year.

 

"Based on unchanged raw material prices and higher volume sales, we expect the revenue to be marginally higher in 2004 than in 2003," said the company.

 

Bulk vegetable oils, which are still a significant part of its business generating 30 per cent of Aarhus' gross profit in this year's first six months, remain under price pressure, eroding margins.

 

And speciality fats for the chocolate and confectionery sector, expected to see increased demand following new legislation in Europe last year allowing the use of cocoa butter equivalents, have not generated the anticipated sales.

 

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