Shares in Dairy Crest tumbled this morning (10 November) after the company warned annual profits would fall by around 10% as consumers become more “value driven”.

Dairy Crest shares on the London Stock Exchange stood at 245.75p at 11:58 GMT, a fall of 25.5%, in the wake of the company’s profit warning.

The UK group said a combination of the economic downturn, weaker returns from dairy ingredients and plans to delay property disposals would hit earnings.

Chief executive Mark Allen said Dairy Crest would look to keep a lid on costs, while investing in other areas of the business, including marketing.

“The economic environment is becoming increasingly tough and more difficult to predict,” Allen said. “However we are actively addressing these difficulties by continuing to invest in our business, particularly in the form of marketing spend and in the development of our operating facilities. We will also maintain the ongoing focus on operating efficiencies and cost control. We believe that these initiatives will leave us well positioned for the future.”

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Allen said Dairy Crest had “delivered a robust performance” during the first half of its fiscal year. Revenue was up 6% at GBP808.2m (US$1.28bn) for the six months to 30 September, while underlying pre-tax profits rose 4% to GBP38.5m.

“This has been driven by the continuing growth of our leading brands, achievement of price increases and a focus on cost reduction,” Allen said.

Dairy Crest said its key brands had seen sales rise in volume and value terms. Cathedral City, Clover, Country Life Spreadable and Frubes all saw “double-digit growth”, the company said.

The group also said St Hubert, its French and Italian spreads business, was making “solid progress”. Dairy Crest pointed to rising sales from its St Hubert Omega 3 brand in France. The product saw sales volumes rise 3% and sales climb 10% in value terms despite the French spreads market declining in volume terms during the first half of the year.

In Italy, Dairy Crest said its Vallé brand had seen sales by value jump 20%, with volumes up 6%.

Nevertheless, Dairy Crest is looking to reduce costs through a series of measures, including a proposal to close its Nottingham dairy. The company has also embarked on a “reorganisation” of its head office that will lead to “significant costs savings” next year, it said.