Shares in Dairy Crest have fallen 6% this morning (28 March) after the company warned one-off charges would weigh on its annual results.
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The UK dairy group’s stock on the London Stock Exchange tumbled 6.04% to 498 pence by 10:00 GMT following the company’s trading update.
Underlying profits for the year to 31 March would meet expectations, Dairy Crest said, but one-off items would hit the company’s bottom line.
The group conceded that the unprecedented rise in milk prices had caused it to make a loss of GBP4.5m (US$9m) on a supply contract with an unnamed customer. The loss will be treated as an exceptional item.
In addition to this, the previously announced GBP9.4m fine imposed by the Office of Fair Trading for price fixing will also take a chunk out of the year’s profits.
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By GlobalDataNevertheless, chief executive Mark Allen said: “We have again made good progress this year and expect to report full-year results before exceptionals in line with our expectations.”
Over the past 12 months, Dairy Crest has focused its energies on its core brands. The strategy, the company said, has driven “good” growth from Cathedral City, Utterly Butterly, Country Life Spreadable, St Hubert Omega 3 and Petits Filous.
Cathedral City was the group’s best performing brand, with sales rising from GBP124m last year to around GBP160m this year.
Dairy Crest insisted it has successfully offset the rising price of raw milk, energy and packaging by increasing selling prices. “In the coming months we will continue to pursue further cost related price increases as necessary,” the company said.
Dairy Crest’s full results will be published on 20 May.
