Cathedral City cheese maker Dairy Crest said first half profits fell 16 per cent as its milk business continues to struggle.
The group said adjusted pre-tax profit fell to £19.1m for the six months ended September 30th from £22.7m the same time a year earlier. Revenue for the period fell to £688.2m from £739.1m before.
Sales of its four key brands Cathedral City, Country Life, Clover and Frijj rose 11% in the half-year period.
Start your trial of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
However its dairies business suffered lower profits amid a difficult trading environment. Sales were down 11% in line with strategy to reduce exposure to this sector.
Latest Videos FromMoneyWeek
Milk producers such as Dairy Crest are struggling to give farmers better prices while supermarkets seek lower prices in a competitive market.
Dairy Crest said it is on track with a plan to restore 3% return on sales in the medium term.
Chief Executive Mark Allen commented: "Dairy Crest has had a busy first six months as we continued to navigate a challenging trading environment. The decisive actions we have taken during the period leave us well placed as we move forward."
Following the sale of St Hubert, the group said it has a more focused business and a much stronger balance sheet. "We now have the ability to make UK acquisitions," it added.
Despite the challenging environment, Dairy Crest said it continues to grow its key brands while reducing its cost base. Improvements to the dairies business are expected to improve future profitability.
"We remain confident that full year performance will be in line with our expectations."
Half year net debt was significantly reduced to £75.8m from £365.3m previously.
The interim dividend has been held at 5.7p.
CJ
