Dairy Crest today (19 May) posted an 8% drop in full-year profits, despite a jump in revenue, as higher costs and low dairy commodity prices dented margins at the UK dairy group.
Adjusted pre-tax profits for the 12 months to 31 March fell to GBP79.5m (US$123.1m), down from GBP86m last year, on sales that were up 5% to GBP1.6bn.
Dairy Crest said that, after the group’s disposal of its Stilton speciality cheese business and its 49% stake in Yoplait Dairy Crest, it had increased its focus on value-added products. The company said that during the fiscal year it delivered “strong” brand growth, with “lighter” brand extensions delivering sales gains.
Dairy Crest has also focused on reducing costs, with its move to restructure head office operations, dairy and depot closures keeping a lid on increased operating expenses.
“Dairy Crest has made significant progress in a number of areas this year. We have delivered good growth in brands, achieved a material reduction in net debt, reduced costs and improved our operating efficiencies,” chief executive Mark Allen said.
During the fiscal year, Dairy Crest reduced net debt by GBP59m.
However, Allen added that in light of the resumption of pension fund payments in October 2009 at GBP20m a year, Dairy Crest will cut its future dividends by 25%, having already reduced its final dividend to 13 pence per share.
“Our plans for 2009/10 are to maintain our focus on cash management and to continue the development of our key brands. Trading at the start of the year is in line with expectations and we believe that our business is in good shape to deliver in the year ahead. In addition we are well placed to benefit when the external environment improves,” he said.
