UPDATE 2-Nutreco Q1 sales fall 7 pct, sees lower H1 profit

* Q1 sales 1.044 bln eur, vs forecast 1.062 bln

* H1 EBITA seen lower than 2008

* Measures taken to restore profitability

* Shares down 5.7 pct

(Adds analyst comment, shares)

By Aaron Gray-Block

AMSTERDAM, April 29 (Reuters) - Dutch food group Nutreco (NUTR.AS) reported a 7 percent fall in first-quarter sales and said its half-year core profit would be lower than in 2008 due to an operational loss at its Compound feed Europe business.

First-quarter sales were 1.044 billion euros ($1.36 billion), below the average forecast of 1.062 billion in a Reuters survey of four analysts. Last year, the company had January-March sales of 1.122 billion euros.

The company said half-year earnings before interest, tax and amortisation (EBITA) will be lower than 2008's 82.3 million euros due to an operating loss in the first quarter at its European Compound feed unit.

It said measures and management changes were being made to restore profitability at that business in the Netherlands.

Richard Withagen, analyst at SNS Securities, said the unexpected and disappointing loss in Compound feed will have a "pretty dramatic" effect on Nutreco's earnings

"The volatility of raw material prices has proved to be a challenge for management," Withagen said, noting that sales at Nutreco's premix and fish feed units are also under pressure.

Nutreco shares were down 5.7 percent at 26.61 euros at 0711 GMT, compared with a 0.20 percent rise in the Amsterdam midcap index .AMX.

Sales at Compound feed Europe fell 25 percent compared with last year due to lower sales prices, the firm said, adding demand for compound feed in Europe was expected to decline in 2009 between 5 and 10 percent on average.

Nutreco, which produces animal and fish feed and is a major poultry processor, pushed back its 2010 profit target in February, saying it would now hit that target sometime between 2010 and 2012 as a result of the fragile economic outlook.

Dutch rival, and the global leader in animal feed, DSM (DSMN.AS) said on Tuesday it expected a softening in animal nutrition markets in coming quarters. [ID:nLS650001] ($1 = 0.7683 euro) (Editing by Dan Lalor and Simon Jessop)