Dairy Crest milks growth despite production problems

Dairy Crest continued to milk revenues in the third quarter despite a challenging market environment and production setbacks.

Dairy Crest continued to milk revenues in the third quarter despite a challenging market environment and production setbacks.

The UK dairy foods company said it was trading in line with expectations with sales volumes up 4.0% across its key brands Cathedral City, Country Life, Clover and FRijj for the last nine months of 2012.

However, it represents a slowdown from the double digit increases seen in the first six months of the year. The company blamed tougher comparatives it has been trading against in the quarter.

"This year has been a tough one for dairy farmers with poor weather and high animal feed costs making production difficult and expensive," Dairy Crest said in a statement.

"With the support of our customers we have paid more to our farmers to help them overcome the challenges they have faced, and to encourage them to continue to provide us with high quality British milk."

The FTSE 250 group added it was on track to delivering savings around £23m this year, aided by strong performance from new products launched in recent years.

The sale of its French branded spreads business St Hubert strengthened Dairy Crest's financial position. The cash from the transaction will be used to supplement growth and make targeted acquisitions in the future.

Mark Allen, Chief Executive of Dairy Crest, said: "Dairy Crest has delivered a solid performance in the third quarter.

"The sale of St Hubert has significantly strengthened Dairy Crest's financial position, and has provided a strong foundation for the future. We still hope to use some of the proceeds to supplement the organic growth that our brands continue to deliver, but we are determined that any acquisition must deliver strong returns for shareholders.

"We do not currently anticipate that any significant acquisition will be made in the near future, and accordingly we have identified a number of internal capital projects to support the continued growth of the business. We also intend to restructure our balance sheet."

RD

Most Popular

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Commodity supercycle or not, here’s a metal that’ll still be in demand – tin
Industrial metals

Commodity supercycle or not, here’s a metal that’ll still be in demand – tin

Commodity prices may have come off the boil recently. But for tin, the only way is up. Dominic Frisby picks the best ways to invest.
7 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021