Dairy Crest posts sales rise as butter costs soar

The dairy processor was on track to deliver its full-year targets, after delivering good growth in the three months to June 2017, it said. But, increased cream prices put pressure on profit margins, so trading remained in line with expectations, despite strong sales growth.

Dairy Crest chief executive Mark Allen said: “Dairy Crest is well positioned for long-term sustainable profit growth. Despite the pressure on butter input costs, the strong performance of our cheese business means that our expectations for the year remain unchanged.​

‘Delivered good growth’​

“The year has started well and our branded business has delivered good growth in the first quarter. The functional ingredients business continues to progress well, and new customers are being signed up. We still expect that the profit contribution from this business will be second half weighted.”​

The processor’s four key brands – Cathedral City, Clover, Frylight, and Country Life – all delivered sales growth. Dairy Crest highlighted Cathedral City’s performance, after sales increased 15% compared with the same period last year.

Deflationary market​

The sales boost came after Dairy Crest reported, in May, that last year’s sales fell by 1.3%​. At the time, it blamed a deflationary market for the sales drop of almost £6M.

Meanwhile, earlier this month, rival dairy processor Arla Foods warned of increased butter and cream prices​. The UK was facing significant inflation on butter and cream, because there wasn’t enough being produced, said Arla’s chief executive Peder Tuborgh.