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Interim Profit Down at Lantmannen’s Food Business

Lantmannen, one of the largest agriculture, machinery, energy and food groups in the Nordic region, has reported flat sales and a drop in profit at its food business for the first half of 2011. Food operating income for the first half was MSEK304 against MSEK351 in the corresponding period of 2010. Net sales for the first half were static at MSEK7,252. Lantmannen’s food division incorporates four businesses- Lantmannen Unibake, Lantmannen Cerealia, Lantmannen Kronfagel and Lantmannen Doggy.

Lantmannen Unibake is the largest manufacturer of frozen bread products for both the food service and grocery sectors in Northern Europe. Lantmannen Cerealia encompasses the majority of the group’s brands in the areas of flour, breakfast foods, mixes, pasta and ready-to-eat meal concepts. Lantmannen Kronfagel is the largest producer of chicken in the Nordic countries, with market-leading positions in Sweden and Denmark. Lantmannen Doggy is the Swedish market leader in cat and dog food.

Operating income for Lantmannen Cerealia and Lantmannen Kronfagel showed positive growth in the first half compared with the previous year, mainly as a result of cost savings.

Operating income for Lantmannen Unibake and Lantmannen Doggy was lower than in the previous year. Lantmannen Unibake’s results were adversely affected by commissioning and running-in costs at its new bakery in Bedford in the UK and the fact that price increases made in response to commodity price increases were not fully reflected in the results due to a lag effect.

In addition to opening a new bakery, Lantmannen also expanded its Lantmannen Kronfagel chicken facility at Valla during the first half. The expanded and modernised Valla facility was opened in May and will be fully operational by the end of the year, when it will be Sweden’s largest chicken production facility.

Per Stromberg, president and chief executive of Lantmannen.

“The slowdown in demand for consumer goods over the last six months is having a clear effect, and our expectations for Easter volumes were not fulfilled,” comments Per Stromberg, president and chief executive of Lantmannen. “Meanwhile, further price increases prompted by rising commodity prices are having a lagged impact, which is affecting results. We shall continue to give priority to these price increases in order to maintain our margins, even if this has a short-term adverse effect on our volumes.”

He continues: “Lantmannen Kronfagel’s results are largely in line with the previous year, mainly due to a strong performance from the Danish operations. Lantmännen Cerealia is keenly feeling the reduced demand, which has caused volume declines in both the consumer and B2B segments and has resulted in a somewhat lower income than in the previous year. Lantmannen Unibake is experiencing a lag effect in pushing through price increases in pace with rising commodity prices. This in turn leads to pressure on margins.”

Lantmannen is owned by more than 40,000 Swedish farmers.

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