French dairy giant Danone saw a strong increase in profits in its UK subsidiaries for 2016, according to accounts filed this week. Danone UK, which sells consumer dairy products to UK retailers, reported a threefold increase in pre-tax profits to £34.5m (€39m) in 2016.

Despite the strong increase in profits, Danone described 2016 as a “challenging year” for its consumer dairy business in the UK, as a result of significant promotional activity from its competitors in the chilled yoghurt and dessert category.

The group reported sales of £201m (€227m) for 2016, marginally higher (+0.2%) than the previous year. However, the decline in international milk prices helped boost operational performance, with operating profits increasing 43% to close to £34m (€38m).

Another of Danone’s subsidiaries, Nutricia UK, reported a 10% increase in pre-tax profits to £22m (€25m). Nutricia UK is Danone’s subsidiary business to handle the sale of infant formula and specialist nutritional foods. Operating profits increased by a fifth to £28m (€32m) as a result of weak dairy commodity prices.

Danone said the biggest challenge for its UK business is managing the currency fluctuations since the Brexit vote as well as stabilising sales of its established consumer brands.