•  Adjusted pre-tax profit down 16%
  •  Sales drop 7%
  •  On-track with strategy to cut exposure to milk sector
Dairy Crest branded sales up 11%

Dairy Crest branded sales up 11%

Dairy Crest has booked a 16% drop in first-half adjusted profits as continued difficulties at its milk unit weighed on the bottom line.

The Cathedral City cheese maker said adjusted pre-tax profit fell to GBP19.1m (US$30.5m) for the six months ended 30 September, down from GBP22.7m last year. Revenue fell to GBP688.2m from GBP739.1m.

Sales of Dairy Crests four key brands - Cathedral City, Country Life, Clover and Frijj - rose 11% in the half year period. However its dairies business suffered lower profits and sales were down 11% as the company moves to reduce its exposure to the sector.

Dairy Crest said it is on track with a plan to restore 3% return on sales in the medium term.

Dairy Crest also emphasised the strength of its balance sheet following the sale of its St Hubert French spreads brand. Including proceeds from the sale, Dairy Crest's total profit was up 65%.

"We now have the ability to make UK acquisitions," the company added.

Show the press release

Dairy Crest Group plc ("Dairy Crest")

Interim Results Announcement

 

Dairy Crest today announces its unaudited results for the six months ended 30 September 2012:

 

 

Half year ended 30 September

Financial Highlights:

2012

2011

Change

Revenue: 1

£688.2m

£739.1m

-7%

Profit for the period:

£49.3m

£29.9m

+65%

Adjusted profit before tax: 1,2

£19.1m

£22.7m

-16%

Basic earnings per share:

37.0p

22.4 p

+65%

Adjusted basic earnings per share: 1,2

11.7p

14.6p

-20%

Half year net debt:

£75.8m

£365.3m

-79%

Interim dividend:

5.7p

5.7p

-

 

1   amounts exclude the discontinued St Hubert business, sold in August 2012

 

2   from continuing operations, before exceptional items, amortisation of acquired intangibles and pension interest

 

·        Much improved financial position following successful disposal of St Hubert

-     St Hubert sold for €430 million, generating a post-tax profit on sale of £47.7 million

-     Balance sheet transformed.  Net debt: EBITDA ratio 0.7x (2011: 2.4x)

-     Well placed to make targeted, value-enhancing acquisitions in the UK

 

·        Strong performance from key brands and new products

-     UK Spreads and Cheese sales jointly up 3%

-     Four key brands together recorded double digit volume and value growth

-     New products, Chedds and FRijj the Incredible, now firmly established

-     Further innovation planned for second half

-     Increased A&P investment to maintain momentum - all four brands on television in the period

    

·        Accelerated efficiency cost savings

-     Ongoing costs discipline throughout business

-     Annual cost savings ahead of £20 million target

  

·        Dairies profits lower in continuing difficult trading environment

-     Sales down 11% in line with strategy to reduce exposure to this sector

-     Milk price support for supplying farmers in challenging times

-     On track with clear plan to restore 3% return on sales in the medium term

 

Mark Allen, Chief Executive, said:

 

"Dairy Crest has had a busy first six months as we continued to navigate a challenging trading environment.  The decisive actions we have taken during the period leave us well placed as we move forward.

 

The sale of St Hubert has created a more focused business and a much stronger balance sheet.  We now have the ability to make UK acquisitions, but we will take time to ensure that any transaction creates value for our shareholders.

 

Despite the challenging environment we have continued to grow our key brands.  We have reduced our cost base and made improvements to our Dairies business. We expect this to benefit future profitability.

 

We remain confident that full year performance will be in line with our expectations."

Original source: Dairy Crest