Danish oils and fats company Aarhus Oliefabrik on Thursday reported a drop in operating income to DKK93m (€12.5m) for the first six months of 2002, down from DKK 125m (€16.8m) for the same period last year, but despite this the company witnessed a slight improvement in profit.
Consolidated profits for the first six months of 2002 amounted to DKK 48 million and were inaccordance with expectations. For the first six months of 2001 profits amounted to DKK 58million (€7.8m) and included a non-recurring income of DKK 25 million from sale of real property toBruun's Galleri.
Profit on ordinary activities, before tax and minority interests, amounted to DKK 76 million in 2002, compared with DKK 73 million in 2001. Aarhus commented that the improvement is due to lower financing costs and higher contributions from the associates - primarily United Plantations Berhad, Malaysia.
The profit also reflects the decline in volumes, but also slightly higher margins and reduced financing costs.Through the first six months of 2002, cocoa bean prices increased by almost 50 per cent - from alevel of GBP 800 per tonne to GBP 1,200 per tonne. Historically, the cocoa butter ratio (therelation between cocoa butter prices and cocoa bean prices) has been stable but during thepast 8-9 months the ratio has declined significantly.
The increase in cocoa bean prices is mainlydue to the increased demand for cocoa powder, with only marginal price increases of cocoabutter (the fatty part of cocoa beans) in the same period.
The Danish company added that earnings from the strategic focus areas - confectionery speciality fats and the food serviceSegment - are continuing to make continued progress and the downward adjustment of the expected operating income is exclusively due to reduced bulk oil sales as a result of intensified price competition.