Dairy Crest to close two sites and sees flat H1 profits

22nd Sep 2014 07:38

Milk products group Dairy Crest announced the closure of two plants with the potential loss of 260 jobs as it forecast that first-half profits would be flat due to tough markets.Dairy Crest said it was closing a glass bottling dairy in Hanworth, West London and a specialist cream potting facility in Chard, Somerset, which together employ about 260 people.It also expects to close a butter and spreads factory early in the second half of the year.The group said: "In a challenging trading environment, Dairy Crest expects to report overall first half Group profits broadly in line with last year. As previously reported, property profits from the sale of surplus delivery depots will make up a greater proportion of profits than in the same period last year."Dairy Crest said sales of its four key brands, Cathedral City cheese, Clover and Country Life spreads and Frijj milk shake together rose 4% in the first quarter compared to the first quarter of the year ended 31 March 2014 and it expects to report a similar growth rate for the first half."Cathedral City, the largest of the four, has had another good six months and continues to grow market share. This is a strong performance in an environment where consumer expenditure on food is falling."The group's dairy operations made a loss in the period despite an increase in property profits from the sale of surplus milk depots.There was downward pressure on fresh milk selling prices and returns from dairy commodity markets have fallen steeply in recent weeks."As a consequence we have regrettably cut the prices we pay to our farmers for their milk in line with the rest of the market," the group said.The cost of the site closures of these site over the next two years will be about £15 million.Chief executive Mark Allen said: "I am pleased that in the current challenging trading environment overall we continue to perform in line with our expectations."