Revenue for the dairy processor was up 2% to £224.9m in the six months ended 30 September 2018. Adjusted profit for the year also grew, up 13% to £22.7m.
Profit before tax dropped 88% to £17.8m for the dairy processor. However, this was because, in the previous year, the company had an exceptional gain of £131.4m due to a reduction in pension scheme liabilities.
Chief executive Mark Allen said the performance in the first half of the year had been driven by its Cathedral City and Clover brands, up 7% and 9% respectively, while demand for its ‘functional ingredients’ – demineralised whey and dietary fibre galacto-oligosaccharides – continued to grow.
Sales for Country Life – Dairy Crest’s butter brand – were down, which the manufacturer attributed to continued high input costs.
“Innovation continues to shape the business and we have recently launched exciting new products in all of our categories,” continued Allen.
“We understand the importance of staying ahead of the market and ensuring we are meeting consumers’ needs. Food provenance, health and wellbeing are core themes which we will continue to focus on.”
Dairy Crest had continued to invest in its Davidstow site (see box below) and was pursuing a number of opportunities to take Cathedral City into new international markets, as well as “deepen its penetration into existing domestic channels”, added Allen.
Exceptional costs for the business came to £4.9m. Costs of £3.2m were incurred in relation to changes to IT systems, while a further £1.7m was incurred in Kirkby to deliver the final site operating model, encompassing new shift patterns, equipment investment and revised terms and conditions.
Meanwhile, last month, the shareholders of two major Northern Irish dairy co-operatives have voted in favour of a merger plan.
Investment in Davidstow site
In May, Dairy Crest announced its intention to expand capacity at its Davidstow, Cornwall creamery from 54,000t of cheese a year up to 77,000t to accommodate the long-term growth of Cathedral City in both the UK and abroad.
The £85m expansion is set to take place in phases over the next four to five years. The expected capital outlay for 2018/19 would be about £6m, followed by about £20m a year in the following four years.