Lower sales volumes also reduced the operating income of the Nordic group's pasta, breakfast cereals, flour and baking mixes division, Lantmännen Cerealia.
But Q2 net sales for the overall food division, which includes chicken production and pet food divisions along with its cereal and bakery units, amounted to MSEK 3,755 from 3,666 in the same period last year, an increase of 2 per cent, said Lantmännen.
Blaming a dip in consumer demand over the past six months, the food, energy and agriculture giant, in the interim report, notes a fall of 10.5 per cent in the Swedish consumer market for flour and mixes as an illustration of such a slowdown.
Unibake’s revenues
The group said that its Unibake division is “experiencing a lag effect in pushing through price increases in pace with rising commodity costs,” which is also affecting the division’s Q2 results outcome.
In addition, reported Lantmännen, results at the Unibake business unit, one of Northern Europe’s largest manufacturer of bakery and frozen bread products, were “adversely affected” by the operational start-up and running-in expenses associated with its recently openned UK bakery site in Bedford.
The closure of the frozen bread bakery in Glostrup in Denmark negatively impacted the food division’s operating income for the first half-year.
Nonetheless, Unibake’s operations in Russia, Poland, Finland and Sweden reported positive sales growth for the second quarter.
Bread trends
Lantmännen notes that despite relatively large downward price adjustments at Europe’s grain exchanges during the past month, grain prices remain at a historically high level, and that it is “much too early to predict what the fall prices will be, as the entire harvest period is ahead of us.”
The Nordic group’s interim report cites whole grains and fresh baked bread ‘on the go’ as the major drivers in the bread market.
Citing recently reporting finds from a European-wide poll - The Bread Barometer Survey - the company said: “Fresh baked bread is at the top of consumers’ wish lists, and the increase in demand has played a major role in the success of bake-off.
With an increased focus on health, whole grains have become a rapidly growing trend.”
And Lantmännen maintains that whole grain hotdog and burger buns, and other products not normally associated with wholegrain are gradually becoming consumer favourites in line with the general health trend sweeping across Europe.