Russian dairy group Wimm-Bill-Dann Foods has today (25 November) warned it sees upward pressure in raw milk prices next year.
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Speaking after Wimm-Bill-Dann posted improved dairy margins for the third quarter of 2009, CEO Tony Maher said the industry is already seeing global pressure with dry milk prices.
“What I would expect to see is some upward pressure in raw milk prices next year, you’re seeing it globally now with dry milk prices,” Maher told analysts. “It’s difficult to establish how much that will be, it depends on many factors … but my expectation is that 2010 will see higher prices than 2009, while 2009 saw lower prices than 2008.”
Sales in US dollars in the company’s dairy segment today tumbled 31.6% to $1.2bn in the first nine months of 2009. This was driven primarily by foreign exchange.
Net income in US dollars dropped 0.1% to $109.4m for the period ended 30 September, while group sales increased 27.3%.
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By GlobalDataMaher told analysts that the company expects fourth-quarter margins to be lower than the third quarter.
“By how much we don’t know,” he added. “The price of raw milk has definitely risen but the availability has been an issue over the last couple of weeks and we’re not giving any guidance for 2010 yet.
“In traditional dairy we are seeing some share coming back, which is good. Dairy is such a big area. There is some money to be made in some areas of it and there’s not money to be made in other areas. We’re not after volume just for the sake of it…margins are important.”
Maher also told analysts that the company was “continuously” looking at merger and acquisition opportunities and insisted that any that may be made, will be in the area of food.
“We have a number of things on the table, some are probably going to fall off because they might not be right for us and some, it depends on whether we can come to agreements on valuations and so on. There are lots of sectors we have been looking at for quite some time and it’s just a question of time really.”
Maher added: “There’s definitely other areas that we will go into but they will be in the areas around food. It’s a question of timing of those and what’s happening in the consumer environment, but it’s clear to everyone we describe ourselves as a food and beverage company with a focus around health and wellness, and I think anything we do we will expect to fit in under that umbrella.”
