Lactalis, the world’s largest dairy producer, said on Thursday its sales had risen by 28.4% in 2022 to 28.3 billion euros ($30.95 billion), but higher costs had pushed its annual net profit down by 14% to 384 million euros.

A spike in food prices, partly linked to Russia’s invasion of Ukraine last year, has created tensions between food suppliers and retailers over pricing as governments try to curb inflation.

“Despite significant competitiveness efforts and faced with the difficulty of passing on an increase of more than 20% in its expenses, the group’s margins have been significantly eroded,” the French group said in a statement.

Lactalis, privately controlled by the Besnier family, said its net profit margin had declined to 1.36% of sales in 2022 compared with 2.02% the previous year.

The group said it increased investments by 17% compared with the prior year to 750 million euros to modernise production sites and reduce its carbon footprint.

Its net debt fell last year to 6.455 billion euros, compared with 7.046 billion reported for 2021.

($1 = 0.9143 euros)

Source : Reuters April 20th 2023