29th Mar 2006 07:01
Dairy Crest Group PLC29 March 2006 29 March 2006 Dairy Crest Group plc Pre-close Trading Update In line with its normal practice, Dairy Crest is issuing the following pre-closetrading update for the full year ending 31 March 2006. The Group has performed well in the second half of the year despite thecontinuing difficult trading environment, and we expect Group profits for thefull year to be in line with our expectations. The focus of the Group's strategycontinues to be on growing the added value and branded side of the business,which we have again supported by increased levels of marketing expenditure. Thishas also been an active year of new product development including the launch ofSt. Ivel advance, a branded milk enriched with Omega-3. FoodsWe have continued to make good progress across our portfolio of key brands inthe Foods Division. In particular, Cathedral City, now the UK's biggest naturalcheese brand, has delivered another strong performance and has once again grownmarket share. At retail sales value the brand is now worth over £100 million.While industry cheese stocks have risen in the second half as expected, theoverall performance of the cheese business has been good, benefiting both fromthe strong performance of Cathedral City and from price rises achieved in Summer2005. During the year we were pleased to significantly increase our own labelcheese volumes with both ASDA and Morrisons. The Stilton market, despite a goodChristmas, continues to be challenging. Clover and Utterly Butterly have continued to grow market share in the dairyspreads segment. Country Life has performed strongly following a major newmarketing campaign with good volume and value growth, particularly in thegrowing spreadable butter segment. St. Ivel Gold was relaunched early in 2006with new packaging, television advertising and a new variant, St. Ivel Gold withOmega-3. The strength of our spreads brand portfolio enabled the Group toachieve price increases on most of its spreads brands in early 2006. Yoplait Dairy Crest's performance has been strong, resulting from good brandgrowth and the benefit of closing the UK own-label operations in June 2005.Petits Filous, Frubes and Yop all achieved strong volume and value growth duringthe year. DairiesFresh milk volumes to major retailers benefited in the second half from theadditional volume gained from Morrisons, which commenced at the end of October2005. The integration of Midlands Co-op Dairies and Foston (Starcross Foods),acquired in May 2005, has progressed to plan with the Birmingham dairy closing,on schedule, at the end of February 2006. Following the closure of Birmingham,the Group's dairies, including Foston, are now running at a high level ofcapacity utilisation. The Group achieved fresh milk price increases from ourmajor retail customers in January 2006 to offset higher oil related input costs. In May 2005 we launched "St. Ivel advance", a branded milk enriched withOmega-3. While it is still at a relatively early stage of brand development,volumes and sales are encouraging and the brand has achieved good levels oftrade distribution in major supermarkets. The household business has continued to perform well in the second halfbenefiting from a price increase in October 2005 with no negative effect on theunderlying decline rate, the acquisition of Arla's London Foodservice businessand increased non milk product sales. As previously announced the Company has been reviewing its pension position andthe level of the deficit under IAS19. The Company intends to reduce the level ofthis deficit over time and accordingly has decided to make additional cashcontributions to the pension scheme of £6 million in the current financial yearending March 2006 and £12 million in each of the following two financial years. Drummond Hall, chief executive of Dairy Crest, commented on the full year: "We are pleased with the performance of our key brands, particularly thecontinued strong growth of Cathedral City. During the year we have been activein new product development with emphasis in the functional foods area. OurDairies division has been strengthened by the successful integration of MidlandsCo-op Dairies and Foston. Despite the competitive environment and thesignificant increases in oil-related costs, we expect results for the year to bein line with our expectations." Preliminary results for the year ending 31 March 2006 will be announced on 24May 2006. For further information, please contact: Dairy Crest Group plc 01372 472200 Drummond Hall, Chief ExecutiveAlastair Murray, Finance Director Will Shaw, Investor RelationsSinead Noble, Media Brunswick 020 7404 5959 William Cullum / Laura Cummings This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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