MANILA, Philippines — Alaska Milk Corporation reported a 39 percent drop in net income last year to P1.1 billion from the P1.8 billion earned in 2010 despite a recovery in sales and profits during the fourth quarter of 2011.

In a disclosure to the Philippine Stock Exchange, Alaska said the strong rebound in sales volume in the last quarter of 2011 helped narrow down revenue shortfall to 3 percent at P11.8 billion from P12.16 billion in 2010.

Sales volume across Alaska’s line of milk products staged a strong recovery as various consumer and trade initiatives were carried out to drive consumption during a seasonally strong fourth quarter.

Revenues for the quarter ended 13 percent higher at P4.05 billion from P3.59 billion in the same period last year and faster than the 2 percent revenue growth posted in the third quarter of 2011.

Sales volume of the Company’s portfolio of liquid canned milk products (evaporated milk and sweetened condensed milk) grew at double-digit rates even as the market contracted amidst a slowing economy.

Incremental export sales of liquid canned milk in the fourth quarter of 2011 also lifted sales volume higher.

On the other hand, sales volume and market share of powdered milk expanded on the back of continuing promotional efforts and brand-building initiatives, notwithstanding increased market competition.

Sales volume of the UHT ready-to-drink line and all-purpose cream sustained its growth trajectory on robust off-take, posting strong double-digit growth rates. Alaska’s non-dairy coffee creamer business also remained brisk amidst continuing efforts to expand the brand’s consumer base.

Operating income for 2011 ended 32 percent lower at P1.25 billion from P1.83 billion in 2010, largely due to higher cost of production inputs. Cost of sales grew 12 percent to P8.47 billion from P7.59 billion a year ago.

In the fourth quarter, operating income grew at a slower pace of 1 percent, at P516 million from P511 million a year ago, notwithstanding the 13 percent revenue and despite cost containment programs.

This was due to higher raw material costs which pushed up cost of sales by 22 percent to P2.95 billion in 4Q11 from P2.41 billion a year ago.