Dairy Crest delivers "robust" results despite challenging market conditions

5th Feb 2015 10:05

Milk products producer Dairy Crest said its dairies business continued to make losses during the nine months to December, but its cheese and spreads divisions performed "robustly" against a challenging environment.In a bid to fight low milk prices and shift its attention on spreads and cheese, the group announced in November last year it would sell its dairies business to a division of German food giant Muller. Daily Crest said the transaction is on track and has been approved by its shareholders.The dairies business is expected to perform better in the second half of the year, driven by higher production and lower selling prices.Its cheese and spreads division profits were helped by lower cream prices during the third quarter of the year. However, cheese was affected by reduced whey realisations and lower selling prices due to lower input costs.However, the group said the results were in line with expectations."Against the background that we operate in, Dairy Crest has delivered a solid performance," said chief executive Mark Allen."Maintaining the sales of our four key brands in line with last year and growing our overall cheese and spreads profits is a good result in today's challenging environment."The performance of our dairies business reflects the difficulties facing the whole UK dairy sector. The proposed sale of our dairies operations, which is progressing to plan, will lead to economies of scale," he continued.The firm, which owns Country Life butter and Cathedral City cheese, said last month it had agreed a three-year extension with Morrison to provide fresh milk to Britain's fourth biggest retailer, though it added it would reduce supply by a third from March.Despite the reduced supply, Dairy Crest said it did not expect results for its financial year ending 31 March to be affected.Shore Capital analysts gave a 'buy' recommendation and a 498p price target as they see "considerable value in the business".Shares were down 0.84% to 493.4p on Thursday at 10:37.