Dairy Crest, the UK’s largest dairy processor, today (2 February) a mixed trading update with branded sales boosting revenue but profits from its dairies division under pressure.

In an interim trading update today (2 February), the Cathedral City cheese producer said it has “coped well in a challenging business environment” and reported a 2% increase in like-for-like sales for the nine months to the end of December. The result excluded the impact of Dairy Crest’s decision to reduce its stake in Wexford Creamery in 2010.

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Third-quarter sales for the firm’s five key brands – Cathedral City, Country Life, St Hubert Omega 3, Clover and Frijj – were up by 8% on last year, Dairy Crest said. Over the first nine months of its financial year, sales of those brands increased 6%.

However, Dairy Crest said trading in its dairies unit was “difficult”. It said high milk purchase prices and lower cream realisations were affecting profits and added it would continue to focus on cost reduction.

“Dairy Crest has coped well in a challenging business environment and overall trading remains in line with our expectations this year,” chief executive Mark Allen said. “Although we remain cautious about the economic environment we continue to manage the business proactively to meet the challenges we face.”

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Dairy Crest will publish its full-year trading update on 29 March and its preliminary results for the year ended 31 March on 24 May.

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Dairy Crest’s share price climbed by 2.13% to 330.60 pence at 11:54 GMT today.