Dairy Crest set to milk profits as consumer appetite soars
● Firm forecasts interim doubledigit volume jump
Cheese and butter maker Dairy Crest forecast yesterday that it remains on track to boost half-year profits despite feeling the squeeze from rising cream costs.
The firm said Cathedral City would churn out double-digit volume growth for the six months ending in September, thanks to a strong customer appetite for the “UK’S leading cheese brand”.
However, sales of butter brand Country Life took a hit after the firm rolled back promotional activity in response to the soaring cost of cream.
Dairy Crest, which also owns Clover and Frylight, said halfyear profits looked set to beat last year and expectations for the full year remained the same.
Chief executive Mark Allen said: “Cathedral City has had a strong first half of the year, delivering good volume and value growth and strengthening its position as the nation’s favourite cheese.
“This performance has more than offset the impact of further input cost inflation in the butter business. Overall, firsthalf profits are expected to be ahead of last year.”
He added: “Our profit expectations for the full year are unchanged despite input costs remaining high. The strength of our brands and focus on quality, innovation and efficiencies mean that we remain well-positioned to deal with market conditions.”
The Surrey-based dairy giant said half-year volumes for Cathedral City, Clover, Country Life and Frylight would all come in higher than 2016.
It added that net debt was expected to fall at year-end.
On the pension scheme, the company said the fund would see an exceptional gain of about £125 million for 2017-18 after changing the indexation from the retail price index to the consumer price index.
Allen added: “We continue to focus on cash-generation and on reducing net debt in the full year. The agreement reached with the trustee of the pension fund is an important development and significantly reduces future funding liabilities.”
Numis Securities analyst Damian Mcneela said Dairy Crest’s first-half trading statement “indicates that sales will be ahead of last year in both volume and value terms, with value ahead of volume”.
He added: “This, we think, is a creditable performance given the very challenging butter market and reflects the strength of its Cathedral City brand.”
Shares in Dairy Crest, which is set to issue its interim results for the six months to 30 September on 9 November, ended the session up 2.4 per cent. The publisher of iconic music and pop culture magazine Rolling Stone is to sell the 50-year-old publication. Jann Wenner, who founded the magazine in his loft in the 1967 “Summer of Love” plans to sell his controlling stake, telling the New York Times that it was the “smart thing to do”. Artists from Paul Mccartney to Lady Gaga have featured on Rolling Stone’s front cover, but the publication has been faced with the pressure of advertising migrating online.