13 September 1996

Waterford Foods profit squeezed out by market

WEAK international dairy markets, high milk prices and the effect of BSE on demand for dairy products have all impacted on profitability for Irish-owned Waterford Foods.

Pre-tax profits in the six months to June 30 fell 4.2% to £11m as increased interest charges combined with lower operating margins.

But at least the purchase of The Cheese Company in the UK last year helped the group increase operating profits by 26% to £23.7m on 53% higher turnover of £561m.

"Retail cheese sales in the UK continued to grow and we increased our share of the expanding mature sector of the market," said chairman John Dowley. "And in the British liquid milk market the decline in doorstep business has significantly moderated.

"But the impact of BSE had an adverse effect on UK produced commodities due to reduced export demand, which in turn weakened the domestic market. Recent downward movements in milk prices and changes in (Milk Marques) selling regime are important initial steps in achieving a better balanced market."n