Dairy Crest “in line with expectations”

Dairy Crest has issued an Interim Management Statement for the three months ended 30 June. Overall, the company said its cheese and spreads businesses have performed in line with expectations during the first quarter and the outlook for the full year remains unchanged. In the first quarter aggregate sales of its four key brands – […]

Dairy Crest has issued an Interim Management Statement for the three months ended 30 June.

Overall, the company said its cheese and spreads businesses have performed in line with expectations during the first quarter and the outlook for the full year remains unchanged.

In the first quarter aggregate sales of its four key brands – Cathedral City, Clover, Country Life and Frylight -were in line with the first quarter of last year.  Cathedral City was said to have had another strong quarter, during which it has continued to grow sales and market share.  The brand is now claimed to be Britain’s 16th largest grocery brand and its 7th largest grocery online brand.  Frylight has also continued to perform very strongly, Dairy Crest said: however, Clover and Country Life sales have fallen in a butter and spreads market that continues to decline.

Dairy Crest said that it expects sales of its key brands to perform strongly as the year progresses. However, as previously announced, the combined performance of the cheese and spreads businesses will be weighted towards the second half.

The project to make demineralised whey powder and galacto-oligosaccharide (GOS) at the Davidstow creamery is nearing completion and Dairy Crest said it expects to start selling both these products in this financial year. The first full-year benefit from these new products, which give Dairy Crest access to new sales channels in growing global markets, will come in the year ending 31 March 2017.

On 6 November 2014, Dairy Crest announced that it had agreed to sell the assets of its dairies operations to Muller.  The sale has already received the approval of Dairy Crest’s shareholders but remains subject to that of the Competition and Markets Authority, which, as announced on 26 June 2015, is now looking at undertakings offered by Müller.  A further update is expected on 21 August 2015.

Underlying cash generation is said to be good and, as the year progresses, lower milk costs will make a significant difference to the carrying value of cheese stock and hence working capital, Dairy Crest believes.

“The year has started off as we expected,” said Mark Allen, Chief Executive. “Higher sales of Cathedral City and Frylight are encouraging in markets that remain challenging. Our demineralised whey and GOS projects are nearing completion and we will see the full benefits next year. We are also making progress with the sale of our Dairies operations and we expect this to complete before the end of 2015. Dairy Crest is well positioned for profitable and sustainable growth. Our full year expectations remain unchanged.”