Dairy Crest boosted by Cathedral City

23rd Sep 2013 07:10

Dairy foods firm Dairy Crest said a strong performance from its well-known cheese Cathedral City helped it perform in line with company expectations for the half year while targets for the full year remain unchanged.The group, which is best known as the maker of Cathedral City cheese, Country Life butter, flavoured milk Frijj and its own-brand supermarket milk, said six-month sales of its four key brands are together likely to be broadly the same as they were in the corresponding period last year when they grew by 11%.Its cheese business performed well in the six months ending September 30th and it expects sales of Cathedral City to outperform the market and increase in the first half compared to the same period last year. However the butters and spreads market has been difficult and profits in this business will be lower than last year, it warned. "Clover sales are expected to be broadly unchanged as the brand continues to outperform the market but Country Life sales will be lower as a result of less promotional activity. We have also faced higher input costs in our Spreads business which has impacted profitability," the group said. The underlying performance of its Dairies business continues to improve towards its medium-term target of 3% return on sales, although reported first-half profits will be impacted by lower profits from property sales which this year will be weighted to the second half. Dairy Crest closed dairies in Aintree, Merseyside and Fenstanton in Cambridgeshire amid challenging market conditions in milk.Chief Executive Mark Allen commented: "We continue to perform in line with our expectations despite the challenging trading environment. The butters and spreads market has been particularly difficult. "We have offset pressures there by growing our Cheese business, reducing our cost base and improving the underlying performance of Dairies."As anticipated, results will benefit from a lower interest charge compared to the same period last year. Net debt at September 30th will be higher than at March 31st reflecting payments made to the pension fund and to redeem loan notes along with the usual first-half outflow of working capital. Profit expectations for the full year ending March 31st 2014 remain unchanged, it said.Dairy Crest, which recently announced its was moving into providing whey powder used in baby products, added: "We are excited by our investment in whey which is in line with our strategy of growing added value sales and expect this to generate attractive returns for shareholders."CJ