Dairy Crest has said it is to significantly reduce its commodity dairy ingredients business through the closure of part of its operations at Chard, Somerset.

The UK dairy group said 80 jobs will go as a result of the closure, which will incur exceptional cash costs of around £4m (US$6.6m) and exceptional non-cash asset write downs of £15.5m, reported AFX UK Focus.

Dairy Crest said it is likely to halt production of skimmed milk products and bulk butter, mainly for the commodity dairy ingredients market, around 9 July this year. The company’s butter and powder facility at Severnside, Gloucestershire will continue to supply the company’s ingredients customers.

The group said it would continue to invest in developing its alcoholic butters, creams and sauces business, with production remaining at the Chard facility.

“The closure of butter and powder operations at Chard is in line with our strategy to increase our focus on developing our added value and branded businesses and will significantly reduce our exposure to the commodity ingredients market,” chief executive Drummond Hall was quoted by AFX as saying.

“The closure of the butter and powder facility at Chard will significantly reduce the size of our ingredients business and is expected to have a broadly neutral impact on the group’s profits, excluding exceptional items, for the year ending 31 March 2004, whilst improving the overall quality of the group’s earnings,” he added.

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