Romanian Dairy Co Albalact 9-mo Net Profit Jumps 70% to 1.7 Mln Lei (395,000 Euro) - Table

The results are very good considering that the pricing war in the past 4-5 months was often times irrational: all competitors were hoping to gain market share but failed. In terms of quantity, Albalact managed to meet its sales volume target, recording a 35% annual rise, which increased its share on certain market segments, Albalact CEO Traian Simion said in a statement.

Simion expects 2010 to be about market consolidation, especially brands consolidation as private labels have become a key market issue.

“[Next year] the battle will be more for market share and less for profitability, but not at any cost, as it was in 2009,” he added.

The local dairy market is expected to grow by between 5.0% to 7.0% this year, Albalact said, quoting April data of Romania's association of entrepreneurs in the dairy industry.

"Following the release of Albalact third-quarter results, we consider that our full year assumptions, in terms of both sales and profitability were too optimistic. Consequently, we will adjust our model and this will most likely result in a lower 12-month target price. We place our [Hold] recommendation and 12-month target price [of 0.39 lei] for Albalact under review," Raiffeisen Capital & Investment said in a note to investors.

Albalact shares were trading up 3.93% at 0.37 lei by 1045 GMT on the over-the-counter market RASDAQ on Thursday.

Following are data from the company's income statement filed with the RASDAQ (in millions of lei):

Albalact (www.albalact.ro), set up in 1990, is located in the Alba county, in central Romania. The company, which has said it ranks fourth on the Romanian dairy market, produces the Albalact, Zuzu and Fulga brands. It competes with France's Danone, Germany's Hochland and LaDorna, a brand of Romania's Dorna Lactate.

Last month Albalact raised its stake in local cheese producer Raraul Campulung Moldovenesc to 93.6% from 77% in a capital hike. The dairy bought the 77% stake in October last year to diversify its range of cheese products.

(1 euro = 4.3027 Romanian lei)