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Dairy Crest sees profits decline

Dairy Crest has announced revenues down 4% to £1,330m. The cheese and spreads business saw profits rise 19% to £66.9m , but a 90% reduction in profit in its dairies business – which the company is in the process of selling – saw profit before tax decline by 59% to £22.1m. Its Cathedral City brand […]

Dairy Crest has announced revenues down 4% to £1,330m. The cheese and spreads business saw profits rise 19% to £66.9m , but a 90% reduction in profit in its dairies business – which the company is in the process of selling – saw profit before tax decline by 59% to £22.1m. Its Cathedral City brand is said to be continuing to grow strongly, and to be Britain’s 16th largest grocery brand, accounting for over 50% of total branded retail cheddar sales. Dairy crest said that it was on track to start production of demineralised whey powder and galacto-oligosacharide this year for growing global markets.

“This has been another year of significant progress for Dairy Crest,” said Mark Allen, Chief Executive. “We have grown combined Cheese and Spreads sales despite the deflationary market environment.  We have also delivered an encouraging improvement in the combined margin of these businesses.  Cathedral City has again outperformed and accounts for over 50% of retail sales of branded cheddar.  Our focus on product development has underpinned these results and our investment in a new innovation centre will support this.  We have again met our target to deliver annual cost savings of over £20 million.  These include consolidating our butter and spreads production onto one site.”

“We have agreed to sell our Dairies operations.  The conditional sale is a positive development for Dairy Crest and the wider UK dairy sector.  Shareholders have approved the sale and the process to obtain regulatory approval is on track.  Completion of the sale will result in Dairy Crest operating from five well-invested manufacturing sites.  It will be a much simpler, more focused, predominantly branded business.  It will also have exposure to the growing infant formula category and emerging markets.”

“Looking ahead, Dairy Crest is well positioned for sustainable, profitable growth,” concluded Allen. “Over the coming year as a whole we expect results to benefit from the continued growth of Cathedral City, ongoing cost savings and the completion of our project at Davidstow where we will add value to our whey stream by producing ingredients for infant formula.  This growth will be second half weighted.”