Dairy Crest annual profits curdle but company remains confident

21st May 2015 09:19

Dairy food group Dairy Crest annual pre-tax profits plunged, dragged lower by the dairies division.In the year to 31 March, the group's pre-tax profits fell 59% year-on-year to £22.1m, while revenue declined 4% to £1.3bn and adjusted pre-tax profits slid 7% to £60.6m.The drop in profits was driven by slump in the diaries group profits, which plummeted 90% to £1.8m, while the cheese and spreads division made a profit of £66.9m, a 19% increase from the corresponding period in 2014.Earlier this year, the FTSE 250 group agreed to dispose of its diaries division to achieve a more streamlined business style and in a statement released on Thursday, the group described the decision as a positive development for the company and the wider UK dairy sector.Analysts at Shore Capital reiterated their 'buy' rating on the stock, although they warned of uncertainty around the sale of the business."We retain our view that Dairy Crest stock would be rerated if clearance for the dairy sales is achieved, though with uncertainty expected for a number of months, we would be surprised if the stock is weak today," they said.The London-listed company said it was well positioned for sustainable growth, adding it had met its target to deliver annual cost savings of over £20m."We expect that our net debt, which at the year-end remains within our target range, will fall once we have completed our major investment projects," said group chief executive Mark Allen."The receipt of the proceeds from the sale of our dairies operations will accelerate this reduction."Dairy shares were down 4.42% to 495.10p at 09:41 on Thursday.