22nd May 2014 09:35
LONDON (Alliance News) - Dairy Crest Group PLC Thursday said it swung to a pretax profit in its last financial year, boosted by property disposals and supported by further revenue growth and strong demand for products such as its Cathedral City cheese.
The dairy food company, which is also known for brands including Utterly Butterly spreads and flavoured milk drink Frijj, swung to a pretax profit for the financial year ended March 31, when including exceptional items and amortisation, as it reorganised and streamlined itself into a single business structure.
Dairy Crest also delivered a sizeable increase in pretax profit, when such exceptional items are excluded.
"Following the transformational sale of our French spreads business [St Hubert] last year, we have completed our reorganisation into one business structure. This has helped in our constant drive to reduce costs. Our largest brand, Cathedral City continues to grow strongly," said Chief Executive Mark Allen in a statement.
Dairy Crest reported a pretax profit of GBP48.8 million for the financial year just ended, compared with a GBP7.9 million loss the prior year, as exceptional costs fell sharply in the year, booking only GBP10.4 million such items in the year compared with GBP56.5 million the year before, which it said reflects the reduced level of restructuring across the business.
Revenues for the year increased 0.7% to GBP1.39 billion, up from GBP1.38 billion a year earlier, supported by 4% growth in its four key brands - Cathedral City, Clover, Country Life and FRijj - with Cathedral City cheese continuing to outperform the market, boosted by product innovation and new launches, Dairy Crest said.
However, the group's butter and spreads business continued to experience sales declines, despite heavy discounting to reverse the downward trend in consumption. It said market volumes in the period were down around 5% and values down by 4%.
"In the butters and spreads market, which is declining, Clover's market share reduced slightly. However Country Life spreadable grew share and outperformed its major spreadable rivals. Country Life block butter sales fell as we reduced promotions due to higher cream input costs," the company said.
Dairy Crest said its expects trading in the current financial year to be in line with its expectations. However, it gave a confident but cautious outlook for the year ahead.
"The current trading environment is challenging. However, the strength of our key brands and our proven ability to cut costs and drive efficiencies mean that we remain confident that we can generate profit growth in all three of our product groups over the medium term," said Allen.
The group proposed a final dividend payment of 15.4 pence, taking the full year dividend to 21.3 pence, a 3% increase on the prior year.
Dairy Crest said its net debt at year end more than doubled, ending the year with net debt of GBP142 million, compared with GBP60 million a year earlier, due to one-off payments resulting from the sale of French business St Hubert.
Dairy Crest also gained GBP25.1 million from the sale of depots, including its Nine Elms milk depot in London, which it sold to Battersea Project Phase 5 Residential Co Ltd for GBP17.6 million. In January, the company had predicted profit from the sale of properties to be only GBP18 million.
The group is currently embarking on a major project to add value to the whey it produces, as a by-product of cheese manufacturing. It is investing at total of GBP45 million at its cheese creamery at Davidstow in Cornwall to allow it to manufacture de-mineralised whey powder, which it said it expects to boost profits each year by around GBP5 million from the 2015/16 financial year.
The group also said that it is currently in the process of agreeing a contract with an exclusive customer, which it said its "already well established in the appropriate markets".
Dairy Crest shares were down 3.9% at 442.20 pence Thursday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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