Dutch dairy company Friesland Foods has revealed that net profit for the first half of the year dropped by 63% – from €79m to €29m – as a result of the rising cost of raw materials and falling dairy prices.

The dairy group has now said that it will be raising prices in stages to offset the increased costs, and therefore anticipates margin improvements in the second half of the year, particularly in Asia, Africa and Europe.

In April, Friesland reached a merger agreement with Campina to create one of the world’s largest dairy groups with combined sales of €9.1bn.

However, doubt was cast on the deal in July when the European Commission opened an inquiry into the merger, stating that the proposal could result in increased prices of dairy and cheese products.