DAIRY Farm International Holdings posted higher sales and profits in the first half of the year, but its showing was not helped by headwinds in the South-east Asia food business.

Net profit came in at US$225 million for the six months to June 30, up by 6 per cent on the same period the year before, according to unaudited financial results released on Thursday.

Sales by subsidiaries rose by 8 per cent to US$5.9 billion, with higher sales reported across all divisions.

The group's health and beauty business saw improvement, with operating profit growing from US$88.6 million to US$154 million for the half-year, which Dairy Farm attributed to "very strong sales and profit growth" in its Hong Kong and Macau operations on higher mainland Chinese visitor numbers.

The bulk of Dairy Farm's operating profit came from its North Asian markets: Taiwan, Macau, Hong Kong and mainland China.

Still, the food segment - which comprises supermarket, hypermarket and convenience store businesses - saw a slump in operating profit, which dropped from US$105.7 million to US$69.6 million, despite mild gains in subsidiaries' sales figures.

The hit from "challenging trading conditions" was largely to supermarkets and hypermarkets, with the bottom line dragged down by some of the group's South-east Asian markets.

"The group saw lower sales and profits in Singapore, Malaysia and Indonesia, while in the Philippines, sales were higher but profits lower, due to increased operating costs resulting from more store openings," Dairy Farm noted. Its other regional markets are Cambodia, Vietnam and Brunei.

"Generally, these businesses have suffered from a lack of investment in infrastructure, range and competitive pricing for some time, while competition in each market has been increasing. Turning these food businesses around and becoming more relevant to the changing demands of customers will take significant effort."

Dairy Farm previously announced in March that it planned to nab a 18.25 per cent stake in Philippine retailer Robinsons Retail Holdings, combining its operations with its new partner's, to go into the food retail business together.

"While the outlook for the remainder of the year is expected to remain challenging for the food businesses, particularly in South-east Asia, the group's other businesses should continue to make steady progress," said Dairy Farm chairman Ben Keswick.

"Significant management and structural changes have been made to address the issues the group faces in a number of areas, but time will be needed to deliver sustainable improvement."

Earnings per share stood at 16.63 US cents, up from 15.68 US cents previously.

An unchanged interim dividend of 6.5 US cents a share was declared.

Dairy Farm closed flat at US$9.23 before results were announced.