Foods strength outweighs dairy weakness at Dairy Crest

Cheese and milk producer Dairy Crest said trading in its fourth quarter has remained in line with company expectations as a strong performances from its foods businesses compensates for hedawinds at its dairies division.

Sales volumes of its five key brands Cathedral City, Country Life, St Hubert Omega 3, Clover and Frijj fell in the first half as it recovered higher input costs from customers. However a strong performance in the second half means that it expects total full year sales volumes to have increased compared to last year.

Cathedral City and St Hubert both recorded record market shares during the final quarter and it has increased sales through its doorstep delivery internet channel, milk&more.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

With its dairies profits still under pressure, it is looking at a range of options to restore this business to a satisfactory level of profitability.

"Our cost reduction programme is on track to deliver annual savings in line with the £20m target we set ourselves at the start of the year. These savings have partially offset higher input costs including milk," it said in a statement.

Chief executive Mark Allen commented, "Our business has faced sizeable inflationary input costs and we have dealt with these by focusing on our strong key brands and by driving efficiencies."

"We continue to proactively shape our business for the long term. We will continue to focus on reducing costs into the new financial year and expect to achieve a further similar level of annual savings."

The group said it would provide a strategic review of French Spreads business at a later date.

cj