Dairy Crest: Milk Profits Fall As Competition Tightens

UK - A challenging market has resulted in falling milk profits over the six month period ending 30 September 2011. However, cheese prices remained strong and Dairy Crest still saw a nine per cent increase in profits before tax overall.
calendar icon 11 November 2011
clock icon 2 minute read

In a challenging consumer environment Dairy Crest has performed robustly during the first six months of the year.

The Group has delivered a two per cent increase in turnover (four per cent excluding the effect of the disposal of our majority stake in Wexford Creamery Limited in June 2010) led by higher sales of our five key brands (Cathedral City, Country Life, St Hubert Omega 3, Clover and FRijj) and milk to major retailers.

The Group's five key brands have grown sales by five per cent compared to the first half of last year, and profits from these brands have also increased despite lower volumes. Further growth is expected from the recent launch of four innovative new ranges supported by strong advertising.

Milk&more sales and sales of liquid milk to major retailers also have continued to grow.

Over the period, Dairy Crest has also acquired the branded foods business MH Foods for £12.3 million.

A strong Cheese and Spreads sector has offset reduced Dairies profits over the period. Cheese profits in the period have benefited from higher selling prices and strong whey realisations and have increased from £12.5 million to £16.5 million. Spreads profits have increased from £27.2 million to £31.7 million.

The last six months has proved challenging for the Dairies division. With the need to pay farmers a higher price alongside a fierce retail price competition, liquid milk margins have been put under pressure, seeing profits fall from £10.9 million to £1.2 million.

Source: Dairy Crest

Dairy Crest Chief Executive, Mark Allen, commented: "Dairy Crest has delivered a robust performance during the first half of the year. In line with our strategy, we have continued to grow our key brands, reduce our costs and control our debt."

"We are concentrating on implementing initiatives that will deliver long term value for everyone involved with our business - providing consumers with high quality and great value, paying a fair milk price to farmers and continuing to invest in marketing, innovation and facilities."

"Looking forward, the consumer environment is challenging and increasingly difficult to predict. Despite this, we remain confident that we will deliver profits for the year in line with our expectations."

TheCattleSite News Desk

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