11th Feb 2016 08:40
LONDON (Alliance News) - Dairy Crest Group PLC on Thursday said the outlook for its full financial year remains in line with its expectations, while noting it now expects the proceeds from the sale of its Dairies operations to be around the lower end of its guidance.
The dairy producer said its cheese and spreads brands performed well in the nine months ended December 31, as combined sales of Cathedral City, Country Life, Clover and Frylight remained broadly in line with the same period last year and volume increased by 2%.
Dairy Crest completed the sale of its struggling Dairies operations to Muller UK & Ireland Group in December. Losses in the division continued until the point of sale due to milk production being high and realisations remaining very low.
On Thursday, the group said it now expects net proceeds from the sale before working capital adjustments to be at the lower end of its GBP40 million to GBP50 million guidance, while anticipating a negative working capital adjustment resulting in net proceeds before costs to be around GBP30 million.
Dairy Crest added that although underlying cash generation in the retained business remains strong, the higher-than-anticipated pre-sale loss in Dairies and the resultant impact on the sale proceeds will hit reported net debt at the year end.
"Dairy Crest is now a branded and added-value business well placed to achieve profitable and sustainable growth. The strength of our brands is demonstrated by their performance in a challenging, deflationary consumer environment," Chief Executive Mark Allen said in a statement.
"We are also entering an exciting new chapter for Dairy Crest. Our functional ingredients business will be a key part of Dairy Crest in the future, giving us access to new growth markets.
The outlook for the full year remains in line with our expectations," he added.
Dairy Crest will release its results for the year ending March 31 on May 19.
Shares in Dairy Crest were trading down 3.3% at 584.50 pence on Thursday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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