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Dairy Crest profits rise 19% after cheese rebrand

Matt Atherton

By Matt Atherton+

10-Nov-2016
Last updated on 17-Nov-2016 at 09:45 GMT2016-11-17T09:45:21Z

Cathedral City cheese helped boost Dairy Crest's profits
Cathedral City cheese helped boost Dairy Crest's profits

Dairy Crest reported a 19% rise in profit before tax to £19.1M in its half-year trading update, boosted by rebranding of its Cathedral City cheese brand and volume growth in Clover, Country Life and Frylight.

The dairy firm’s financial performance during six months ended September 30 was hailed as “an important milestone” by analysts, as the company recorded revenues of £190M – 7% down on the same period last year, held back by a deflationary market.

Dairy Crest’s chief executive Mark Allen said he was pleased, despite the decrease in revenue, and said the firm’s full year expectations remained unchanged.

‘Strong set of interims’

“We are pleased to have delivered a strong set of interim results in our first full trading period since the sale of dairies,” said Allen, describing Dairy Crest’s £80M sale of all its UK dairies to competitor Müller last year.

“Our four key brands are continuing to perform well in a challenging marketplace, with strong volume growth for Clover, Country Life and Frylight and a successful launch of new branding and packaging for Cathedral City.”

Dairy Crest also reported a 19% rise in earnings per share to 9.3p over the six months, and its operating cash flow increased £27.9M to £17.5M. Allen highlighted the future opportunities after completing the Cathedral City rebranding and finishing its programme of investment in functional ingredients at its Davidstowe facility in Cornwall.

‘Attractive opportunities’

Dairy Crest half-year trading update – at a glance
  • Profit before tax up 19% to £19.1M
  • Revenue down 7% to £190M
  • Operating cash flow up £27.9M to £17.5M

“Looking further ahead, the significant investment at Davidstow has opened up attractive opportunities in high-margin, global infant formula markets as well as the potential to develop new functional ingredients,” said Allen.

“Combined with our continued focus on innovation within our key brands, this will underpin future growth and help us to maintain our strong track record of rewarding shareholders with higher dividends.”

The company said it had benefitted from selling its dairy factories in December 2015. Its improved cash generation and profit growth was a direct result of becoming a more “leaner and focused organisation”.

Meanwhile, City analyst Shore Capital said: “Dairy Crest’s interim results for the six months ended September 30 confirm a strong start to the year, an important milestone as it is the first full trading period post the disposal of the dairies activities in December 2015.”

 

What analyst Shore Capital says about Dairy Crest’s half-year results

“Dairy Crest’s interim results for the six months ended September 30 confirm a strong start to the year, an important milestone as it is the first full trading period post the disposal of the dairies activities in December 2015.

“As previously stated we are not changing our forecasts post today’s update, though we have tweaked our earnings per share and net debt expectations.”