Dairy Crest still on track for full year
Dairy Crest warned of lower first half profits, as challenging conditions continue, but said profit expectations for the full year ending March 31st 2013 remain unchanged.
Dairy Crest warned of lower first half profits, as challenging conditions continue, but said profit expectations for the full year ending March 31st 2013 remain unchanged.
Trading in the first half-year has remained challenging and profits, having adjusted for the disposal of the French spreads business, St Hubert, will be lower than the same period last year, the group said in a company statement.
The company's four main brands; Cathedral City, Country Life, Clover and Frijj, performed strongly in the first half, after it increased marketing spend.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely 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
Mark Allen, Chief Executive, commented: "We are pleased with our first half performance despite the significant pressures on our business. Although we expect these to continue into the second half our first half performance together with our plans for the second half means that our profit expectations for the full year remain unchanged."
Dairy Crest said, in line with its continued drive efficiency across its business, is in talks with employees on plans to consolidate its spreads production into a single UK location, an existing facility at Kirkby, Merseyside. As a result, its site in Crudgington, Shropshire, will potentially close in 2014.
Commenting on its Dairies business, in which it has faced unprecedented market conditions, it says it remains focused on achieving a 3% return on sales in this business in the medium term.
"We continue to take a number of decisive actions to achieve this, including implementing milk selling price increases, closing our Aintree creamery, consolidating milk rounds to allow the closure of 23 depots in the six months and reducing overheads. Plans are on track to close our Fenstanton dairy, as previously announced, this autumn," it explained.
Key to share price performance is the use of the proceeds from St Hubert. Acquisitions are likely to be materially earnings enhancing given the low returns on cash.
Analysts at Peel Hunt however have chosen to focus in a reserach note today on the potential for M&A, saying that: "Key to share price performance is the use of the proceeds from St Hubert. Acquisitions are likely to be materially earnings enhancing given the low returns on cash."
CJ
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
Shein’s London IPO could go ahead, despite forced labour concerns
The chief executive of the Financial Conduct Authority suggests that alleged human rights breaches aren’t a reason to block Shein’s proposed London IPO
By Dan McEvoy Published
-
Elon Musk's $56bn Tesla pay deal rebuffed again by US judge
It is the second time Musk's pay deal has been rejected, with judge Kathaleen McCormick upholding her previous January decision
By Chris Newlands Published