23rd Sep 2013 08:15
LONDON (Alliance News) - Dairy Crest Group PLC Monday said that it saw a steady trading performance in the first half of the year, and has left its full-year profit expectations unchanged.
But the Dairy Crest said its net debt increased during the period, and its spreads business saw a fall in profits.
In a pre-close trading statement, the British dairy products company, known for brands including Cathedral City cheddar cheese and Utterly Butterly spreads, said that its half-year results, due out on November 7, will benefit from a lower interest charge compared to the same period a year earlier. However, it said its net debt increased during the first half, due to payments made to its pension fund and to redeem loan notes, along with its usual first-half outflow of working capital.
Dairy Crest said that it remains focused on cost cutting, and said that sales collectively from its four key brands, will be broadly flat when compared to the first half of last year.
The group said that its cheese business performed well in the first half, driven buy a strong performance from its Cathedral City brand.
However, it said that its spreads business will report lower profits than last year, due to higher input costs and a challenging butters and spreads market, as well as lower sales from its Country Life brand due to less promotional activity.
It also said sales from its milkshake brand FRijj fell in the first half, as its scaled back promotions during the upgrade of its production capacity and capability.
Dairy Crest said that despite lower first-half profits, its underlying performance of its dairies business continues to improve towards its medium-term target of a 3% return on sales, helped along by higher returns from cream.
The group said that its upgrade work is on track to be finished in October, and that it expects a better performance in the second half, due to annual cost saving of more than GBP20 million this year.
The dairy products group also said that it is continuing to invest around GBP45 million to add value to the whey produced as a by-product of the cheese made at its creamery in Davidstow, Cornwall. It said that it expects production of whey powder, an ingredient in baby food, to start in the first half of 2015, and anticipates that the project will enhance its full-year operating profits by over GBP5 million after additional depreciation charges of around GBP4 million.
Dairy Crest is expected to release its interim results on November 7.
Its shares were up 1.3% or 6.30 pence Monday morning, trading at 477.90 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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