Arla Foods has unveiled a 16% decline in net profits off the back of increasing price competition and milk production.

The Danish-based co-operative saw net profits fall to DKK513m (£54.5m) for the first half of 2012, down from DKK612m the year before. However, despite the fall in profits, the group said revenue had increased by 12% to DDK29.9bn, up from DKK26.7bn in 2011.

It also revealed that Arla Food Ingredients (AFI), the subsidiary that specialises in whey protein technology, had seen sales increase by 14%.

Arla Foods said innovation had been key to its success, citing its functional whey protein Nutrilac BK-7781 which is used by bakers across Europe instead of eggs.

The company added: “Global markets for whey proteins and lactose are growing. This trend is mainly driven by the growing middle class sector in both China and India. Strong demand has led to a rising price level and the trend is expected to remain stable over the next six months.”

The division said a key priority of 2012 was to find a production footing in the USA, where “there is great potential for more whey use”.

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