Dairy Crest has significantly revised proposed changes to its pension scheme in a bid to avert strike action.
Following emergency talks with the Transport and General Workers' Union (T&G), the proposed closure of the final salary pension scheme to new employees has been deferred from April 1 to July 1 and the company has agreed to put an extra £30M into the pension fund over the next two years.
It will also pay the Pension Protection Fund levy on behalf of the pension fund and defer changes to early retirement terms for five years. There will be a full review of pensions in 2009, including the possibility of re-opening the scheme to new entrants, and the firm has agreed to set up pension consultation and communication forums.
"Dairy Crest has made substantial concessions in the face of the angry reaction from the workforce to the original plans," said Transport & General Workers Union national secretary for food and agriculture Chris Kaufman. "The offer now on the table is the best we can achieve through negotiation, which is why we are recommending that our members vote yes in the ballot."
Balloting began on May 22 and will conclude on June 8, but the firm has other problems. Despite revenue increasing by 5.6% in the year to March 31 to £1.4bn, adjusted profit before tax dropped by 10.6% to £67.7M. The firm blamed tough own-label and commodity product markets and high oil costs. "Margins in our liquid products business have been unsatisfactory, and the stilton market continues to be challenging," said chief executive Drummond Hall.
Dairy Crest's retail milk business suffered a major blow with the loss of Tesco's fresh milk contract in April 2005, and the company is now focusing on its added value and own-label business with an emphasis on functional products.
Meanwhile, dairy processor Arla Foods reported an underlying pre-tax profit of £10M in the six months to March 31 compared with £23.5M a year before. Sales rose to £683.2M from £664.2M. Arla blamed the lower profit on higher energy costs coupled with delayed price rises plus a big fall in sales of its Cravendale milk thanks to retailers cutting own-label prices.
Robert Wiseman Dairies reported a 16.2% increase in turnover in the year to April 1 to £568.6M, on sales volumes up 14.2% at 1.38bn litres. Pre-tax profit rose 6% to £26.7M.
Wiseman confirmed that it would build a new £46M dairy at Bridgwater, Somerset.