French dairy group Lactalis says 2023 profitability hit by inflation

PARIS (Reuters) - Lactalis, the world's largest dairy producer, said on Thursday its sales had risen by 4.3% to 29.5 billion euros ($31.51 billion) in 2023, but its net profit margin remained low as inflation pressured consumers purchasing power.

Lactalis, privately controlled by the Besnier family, said its net profit stood at 428 million euros last year, compared to 384 million in 2022, with a net profit margin of 1.45% of sales in 2023, slightly higher than 1.36% of turnover in 2022 but well below the 2.0% recorded in 2021.

"In a year 2023 marked by inflation, its consequences on purchasing power and unfavourable international prices, the group's profitability remained low. Nevertheless, in this difficult context, the Lactalis teams have maintained the course of profitable and responsible growth," Lactalis Chairman Emannuel Besnier said in a statement.

The change in consumers' behaviour last year led to a drop in sales volumes and a particular appetite for distributor brands, to the detriment of national brands, especially in Europe, Lactalis said.

The group invested more than 920 million euros to develop new products, modernise its dairies and cheese factories in France and North America and reduce its environmental impact, it said.

Lactalis' main markets are France, the United States and Canada.

($1 = 0.9363 euros)

(Reporting by Sybille de La Hamaide; editing by David Evans)