Shares in Dairy Crest were higher this morning (24 September) after the UK dairy group said its expectations for annual profits had not changed despite a “challenging” first half of the year.
In a trading update, Dairy Crest admitted half-year profits, after adjusting for the sale of its French spreads unit, would be lower year-on-year.
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However, the company, which is scheduled to report its first-half numbers in November, said its “profit expectations for the full year ending 31 March 2013 remain unchanged”.
Dairy Crest has faced challenges in its dairies division and attempts to cut the price it pays farmers for milk were thwarted amid this summer’s farmer protests. The company said the shelving of plans to cut prices in August had a “small adverse effect on profits”. Today, Dairy Crest confirmed it will up the price it pays farmers as it expects returns from commodity markets to improve. It is also forecasting higher selling prices.
Nevertheless, to improve the financial performance of its dairies business, Dairy Crest is closing a creamery, has shut 23 depots and is set to close a dairy this autumn.
The company pointed to a “strong” performance from its four key brands – Cathedral City cheese, Country Life and Clover butter and Frijj milkshake. However, to boost efficiency, it announced on Friday it planned to close a spreads facility.
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By GlobalDataChief executive Mark Allen said: “‘We are pleased with our first half performance despite the significant pressures on our business. Although we expect these to continue into the second half our first half performance together with our plans for the second half means that our profit expectations for the full year remain unchanged.”
Shares in Dairy Crest were up 0.3% at 338.9p at 10:17 BST.
