Dairy Crest sees lower first half profits from core products

22nd Sep 2015 07:14

(ShareCast News) - Dairy Crest said first quarter total sales of it four key brands, Cathedral City, Clover, Country Life and Frylight, were in line with the same period of last year, but added that profits in the first half would be lower before an expected second half improvement.The company said full year expectations were unchanged, reflecting lower cheese costs and an expected improved performance from its spreads and butters business in the second half.Cathedral and Frylight continued to perform strongly, growing sales and market share during the period. Clover and Country Life sales fell in a butter and spreads market "that remains challenging".The company said its dairy said cheese, spreads and butters businesses will be weighted to the second half of the year ending 31 March 2016 and that first half profits in these units will be behind those of the first half of last year."Dairy commodity markets have been deflationary during the first half and as a result our input costs have fallen," Dairy Crest said in a statement."On average our cheese is matured for around a year and therefore lower milk purchase prices will only be fully reflected in the cost of cheese sold in the second half of this year."The group said it expected an upturn at Clover with the introduction of a new recipe that contains no artificial ingredients.Dairy Crest is offloading its lossmaking milk operations due to falling milk prices prices. The £80m sale of its dairies to Müller still has to receive the approval of the UK Competition and Markets Authority.Mark Allen, Chief Executive, commented said the first half of the year had "played out largely as we expected"."Cathedral City continues to go from strength to strength and has again grown sales and market share. The strong performance of Cathedral City and of Frylight is particularly encouraging in markets that remain challenging. Our cost base remains firmly under control.""We have always believed the sale of our Dairies operations is good news for the whole UK dairy sector which is currently facing significant challenges arising from low dairy commodity returns."