Milan, July 31 - Italian dairy group Parmalat said core profit fell 10.4 percent in the first half to 146.3 million euros due to a rise in milk prices, higher costs in South Africa and Latin America and a slowdown in demand.
Italy's biggest listed food group said in a statement on Wednesday revenues for the January to June period were up 9.1 percent on a like-for-like basis to 1.975 billion euros ($3.08 billion).
It said first-half net profit was expected to be 425-430 million euros, up from 244.3 million euros a year before, and would include proceeds of 437.9 million euros from financial settlements related to claims around its 2003 crisis.
It said the decline in earnings before interest, taxes, depreciation and amortization was due to an "increase in the cost of raw milk material (and) .... lower unit sales caused by shrinking consumer demand."
It also cited higher manufacturing overhead and lower sales "attributable almost exclusively to strong inflationary pressure in South Africa and central and south America."
Parmalat this month slashed its 2008 forecast for sales and core profit due to a worsening economic climate.
It now expects revenues to rise around 3 percent this year while it foresees earnings before interest, taxes, depreciation and amortization (EBITDA) of around 350 million euros, down 5 percent. Parmalat had previously expected EBITDA to grow 7 percent this year on sales growth of 3 to 5 percent.
Parmalat buckled under 14 billion euros of debt in 2003 after uncovering a 4 billion euro hole in its accounts. It was restructured and relisted on the Milan bourse in 2005. Parmalat has successfully sued several banks that worked with previous management.
Parmalat is bidding with Australian co-operative Murray Goulburn for dairy producer Dairy Farmers, but Australia's competition watchdog has raised concerns about the bid, and will make a final decision next month.
Parmalat said it could revaluate its position in Australia depending on the outcome of the bid.
"We know that in Australia, there is a consolidation of the market. We've are trying to participate (in) this process ... in order to remain there with a bigger size," Chief Executive Enrico Bondi told analysts on a conference call.
"If we are not be able to ... we have to reconsider the situation."
Parmalat shares closed down 0.13 percent at 1.578 euros. ($1=.6416 Euro)