Wimm-Bill-Dann Foods will see its dairy margins improve in the second quarter of 2010 after suffering from high raw milk costs in the first part of the year, the Russian group’s CEO said today (3 June).

Speaking to analysts after publishing Wimm-Bill-Dann’s first-quarter results, CEO Tony Maher said easing raw milk prices and success in increasing consumer prices on selected dairy lines would boost margins in a category that accounted for over 70% of turnover in the quarter.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

“We should see stronger gross profit margins in the second quarter for dairy. Prices will be somewhat up on the second quarter of last year but lower than in the first quarter of this year,” Maher said. “Raw milk prices are easing.”

For the first three months of 2010, Wimm-Bill-Dann saw its gross margins fall from 32.5% a year earlier to 28% thanks to “sharp increases” in raw milk costs.

The figure cast a shadow over a set of results that included a jump in net income – due to lower finance costs – and a 19% rise in revenues.

Maher said Wimm-Bill-Dann spent $24m more on milk procurement in the first quarter and said raw milk was 15-20% more expensive in Russia than in Germany.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

He warned that he did not expect raw milk prices to return to the low levels seen in the second and third quarters of 2009 but insisted easing costs and moves to increase consumer prices would improve Wimm-Bill-Dann’s dairy margins.

Nevertheless, Maher said Wimm-Bill-Dann did not automatically look to increase consumer prices to help margins and added the company was also looking at “driving down” costs.

“Our job is to make sure we ride the waves and troughs – and not just do it quarter over quarter but do it over time,” Maher said.