Aarhus: drive into speciality fats starts to pay off

Healthy sales of chocolate fat replacers in Denmark lift first half figures for Danish speciality oil firm Aarhus United.

The company, on the cusp of a merger with fellow Scandinavian fats and oils firm Karlshamns, pulled in DKK79.8m (10.7m) in profit to June, a wisp below the DKK80.2m reported for the previous year.

The drive into the speciality fats market is starting to pay off. Esben Vibe, CFO for Aarhus United recently told FoodNavigator.com the firm had "worked hard on this market and gained market share."

"In the strategic focus area - chocolate confectionery vegetable fats - sales volume and net margin improved during the first half of 2005, compared with last year," added Aarhus in a statement this week.

Raw material prices inched up by 3.5 per cent on the previous year, as did "direct and indirect production overheads".

Despite the rise in overheads, the firm delivered a distinctly upbeat interpretation of the results, claiming the profit level attained for the first half, "represents a significant improvement as consolidated profits for the same period last year included non-recurring income from the sale of silos and land."

Aarhus United is on the brink of a merger with Swedish fats firm Karlshamns after Aarhus' majority shareholder Malaysian firm United International Enterprises (UIE), announced last year it would sell its 46 per cent slice in the firm.

Under Danish law, whoever bought the UIE majority chunk would have to bid for the remaining shares, meaning in reality that the entire company was up for sale.

But after months of speculation Aarhus announced earlier this year that consolidation for the European fats business was on the way with the company's shareholders voting to merge with number one Scandinavian fats and oils firms Karlshamns.

As Scandinavia's number one fats and oils company, from the outset Karlshamns was mooted as the natural frontrunner for the Aarhus business: a combination of the two businesses creating a strong market player within speciality fats for the confectionery and food industries.

Combined, last year Karlshamns and Aarhus pulled in over €1 billion in sales, €75 million in EBITDA, and together they have about 2200 employees.