Shares in Dairy Crest, the UK’s largest dairy processor, fell today (4 February) amid fears over what impact cost inflation could have on the business, a City analyst told just-food.
Dairy Crest, which owns brands including Country Life butter and Frijj milkshakes, said pre-tax profits for the nine months to the end of December were “in line with expectations”.
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The group said its overall sales, excluding the impact of the sale of its majority stake in Wexford Creamery last summer, were also in line with expectations. Third-quarter sales of its five key brands, which also include Cathedral City, St Hubert Omega 3 and Clover, were up 11%.
Turning to costs, the company said, like much of the food industry, it was “experiencing upward pressure on input costs” including oil, milk and vegetable oil.
Dairy Crest said it was “making progress to recover these from our customers” but said it was “determined to control costs wherever possible and have commence a programme fo internet tenders to assist in the process”.
The group said it was also “optimising” supply chain costs across its dairy network and was investing in its dairies to “drive efficiencies”.
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By GlobalDataDairy Crest said its annual pre-tax profits, again projected to be in line with expectations, would be supported by the “anticipated delivery of over GBP20m (US$32.2m) of operational cost savings”.
Chief executive Mark Allen said: “We are encouraged by the progress we have made so far this year and anticipate that we will maintain our momentum through the fourth quarter.”
Shares in Dairy Crest were down 1.1% at 376.6p at 12:06 GMT, having fallen by as much as 2.8% earlier in the day.
Investec analyst Nicola Mallard said: “[The shares] have rallied a bit but I think there is just general nervousness around cost inflation in the sector.”
