Dairy Crest hails Cathedral City returns as it offsets record costs for cream

DAIRY CREST has recorded a giant 871 per cent increase in first half profits as strong returns from its Cathedral City cheese range helped offset record cream costs.

Pre-tax profits for the six months to September 30 soared to £151.4m, up from £15.6m a year earlier, after the company changed the way it calculates pension payouts, linking its scheme to the Consumer Price Index (CPI) rather than the UK’s Retail Price Index (RPI).

It resulted in exceptional income of £132.4m for the period.

Excluding exceptional items, adjusted pre-tax profits still rose 8 per cent to £20.6m.

Chief executive Mark Allen said it was an encouraging first half and cheered the performance of the company’s oil and spread brands, Clover and Frylight , which experienced volume growth of 2 and 10 per cent respectively.

Cathedral City cheese also emerged as a winner in the first half of the year, with volumes rising 10 per cent.

“Cathedral City, the nation’s favourite cheese, continues to go from strength to strength and has produced exceptional growth over the period,” Mr Allen said.

“We have delivered good profit growth despite a record high cream price, which has a temporary but significant impact on input costs in our butter and spreads business.”

The company’s butters business is facing “significant” cost pressures due to surging cream prices which rose to nearly £3 per litre by the end of September, marking a 65 per cent increase in wholesale prices from a year earlier.

Dairy Crest has since cut back on promotional sales of its Country Life butter products in order to protect margins, but that move has not come without compromise, as sales volumes dropped 14 per cent.

The firm expects cream prices to remain high in the second half. The company has steadily increased the price it pays for milk.