Dairy Crest today (18 July) reported a fiscal first quarter “in line with expectations”, with volumes of its four main brands up 7% but pressure on the margins from its butter business.
In a trading update for the three months to 30 June, issued ahead of Dairy Crest’s AGM, the UK dairy group said its “outlook for the full year remains unchanged” amid growth from its cheese arm.
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Dairy Crest’s “four key brands” – Cathedral City, Clover, Frylight and Country Life – saw their combined volumes rise 7% year-on-year.
The company did not provide specific details on the volume performance of each brand, although it said three – Cathedral City, Clover and Frylight – “have all grown strongly”. It pointed to a 15% jump in the sales volumes of Cathedral City cheese.
However, Dairy Crest said cream prices, which it said determine input costs for its butter business, “increased substantially” during the first quarter, which the company asserted would “put pressure on margins in our butter business”.
Dairy Crest said it had reduced promotions on its Country Life butter brand, which it admitted was hitting volumes but “mitigates some of the margin pressure”.
Chief executive Mark Allen added: “The year has started well and our branded business has delivered good growth in the first quarter. The functional ingredients business continues to progress well and new customers are being signed up. We still expect that the profit contribution from this business will be second half weighted.
“Despite the pressure on butter input costs, the strong performance of our cheese business means that our expectations for the year remain unchanged.”
