Dairy Crest revenue diluted by weak Spreads division

7th Nov 2013 08:56

- Half-year revenue slips, returns to pre-tax profit - Weak spreads, progress at key brands- Confident for full year performanceDairy Crest revealed a mixed set of half-year results as progress at its four key brands was offset by persistent difficulties its Spreads division.The group, whose key brands include Cathedral City, Country Life, Clover and FRijj, booked a pre-tax profit of £19.7m in the six months to September 30th in contrast to a £13.1m pre-tax loss a year earlier. Adjusted pre-tax profit climbed 18% to £21.9m while revenues during the period fell 2% to £672.2m. Group operating profit dropped 6% to £27.3m after a weaker performance in spreads."Spreads profits are down in a butters and spreads market that remains difficult. Demand has fallen across the category and higher cream prices have adversely impacted costs," the group explained a company statement. In contrast, sales for its four main brands grew as it delivered annual cost savings ahead of its £20m target.Dairy Crest Chief Executive Mark Allen: "Demand has fallen across the category and higher cream prices have adversely impacted costs. In this challenging environment Clover, with sales up 2%, and Country Life Spreadable have both performed creditably."However, Country Life block butter sales and market share are down significantly, mainly as a result of lower promotional activity, leaving overall Country Life sales down 17% compared to the first half of last year."In addition, some retailers have reduced the amount of space they allocate to butters and spreads in their stores and our Utterly Butterly brand has been adversely affected."Half-year net debt increased to £192.3m from £75.8m a year before. Dairy Crest has recommended an interim dividend of 5.9p, up 3.5% from the 5.7p offered last time. The group said it remains confident its full year performance will be in line with company expectations.CJ