First half profits for Dairy Crest up on last year
First half trading was “in line with our expectations,” said the company. “Operational efficiencies and selling price increases have broadly offset higher input costs. Higher property profits will result in overall profits for the first half being slightly ahead of the same period last year”.
Sales of the firm’s five key brands - Cathedral City, Country Life, Clover, St Hubert Omega 3 and Frijj – have continued to rise but volumes will be lower than in the same period last year, said the company. However it expected to post full year profit in line with expectations.
Tough environment
Mark Allen, chief executive, said: “We are pleased that we continue to perform as expected in this tough environment. In the first half, our broad base, high quality brands and ongoing cost saving measures have allowed us to balance the conflicting demands of increased input costs and subdued consumer spending.
“At the same time, we are investing for the future, with new products and upgraded facilities. Overall we remain confident of delivering full year profits in line with our expectations.”
The firm said innovation remained an important part of its strategy with the launch of four new products during the reporting period. In the UK, Dairy Crest launched 'Chedds', a range of three new children's cheese snacks and 'The Incredible', three new premium flavours for our branded milk shake Frijj.
In France it has launched a new St Hubert non-dairy cream. It is also about to launch a new spread that contains seeds.
Milk sales
The firm’s dairies business continued to grow milk sales to the major retailers and has maintained sales at over £1M per week. But strong competition in retail milk markets has led to lower residential milk sales, said the firm.
Net borrowings at September 30 will be higher than a year ago reflecting higher cheese stocks, increased capital investment and the previously announced purchase of MH Foods.
Banking and asset management group Investec said in a statement: “The environment is tough for food producers although Dairy Crest is holding its own to date. Interim profits will be flattish, excluding property, with progress in food offset by a decline in dairy.
“The industry challenge in 2H [second half of the year] will be to recover higher raw milk prices and…how to handle this on the already weak doorstep.”
The firm’s interim results will be announced on November 10.
