UK dairy products group Dairy Crest has reported a 4% rise in annual profits, but warned that excess stocks of mature cheddar cheese would continue to impact profit margins.

The company, whose brands include Utterly Butterly, Cathedral City and Yoplait, said margins would be affected in its current first half to September but are forecast to improve in the second half.

Dairy Crest posted underlying pre-tax profits before exceptional items and good will of £76.8m (US$126.9m) for the year to 31 March, which was in line with forecasts of £75.8-77.5m.

Chief executive Drummond Hall said the group’s branded business had made a good start to the new financial year and he forecast profits for the full year to show “good progress”, reported Reuters.

“Cheese stocks have come down from the peak of August 2002, with mild cheese already in balance and mature cheese likely to take a few more months,” Hall was quoted by Reuters as saying.

Dairy Crest, which acquired St Ivel spreads business last year, is moving to focus on its value-added branded businesses, which now account for 55% of group profits.