UK-based Dairy Crest has today (24 May) posted falling profits for the 2006 financial year, after finding the own label market particularly challenging.

Profits fell from GBP70.2m (US$131.2m) in 2005 to GBP41.3m this year, despite revenue increasing from GBP1,348.8m to GBP1,424.2m at the dairy group.

Dairy Crest CEO Drummond Hall said: “The Group has delivered results in line with expectations. Whilst markets for own label and commodity products continue to be challenging, trading at the start of the new financial year is on track.

“We expect our brand portfolio, supported by marketing investment and further new product development, to continue to make good progress. The Group should also benefit from the actions we have taken to strengthen the Dairies division.”

The company’s key cheese and butter brands, Cathedral City, Clover, Country Life Spreadable, all performed strongly but retailer demand for milk flaundered after the group lost its Tesco contract business in September 2005. It did gain an additional Morrisons fresh milk volume during the year though.