FDBusiness.com

Reflecting strong volume and value growth across most of its brand portfolio, Dairy Crest has reported an 8% increase in adjusted profit before tax to £20.6 million on revenue from continuing operations up 16% to £220.1 million for the six months to 30 September 2017 compared to the corresponding period last year. Revenue increased in both of Dairy Crest’s product groups – cheese and functional ingredients by 17% and butters, spreads and oils by 19%.

Total product group profit from continuing operations increased by 9% to £25.1 million. Cheese and functional ingredients group profits increased by 91%, to £22.1 million. This more than offset the impact of high butter input costs in the butters, spreads and oils product group where profits of £3.0 million represent an £8.5 million reduction compared to last year.

In aggregate, volumes of the group’s four key brands (Cathedral City, Clover, Country Life and Frylight) grew by 4% in the first half, in spite of the input cost challenges faced by Country Life. Overall value growth of 6% was ahead of volume growth – a trend that is expected to continue in the second half of the financial year.

All of Dairy Crest’s spreads brands were in growth for the six month period, delivering a combined 8% uplift in volume versus a spreads market which declined by 3%, according to IRI Kantar data. The pace of decline of the spreads market has started to slow, reflecting the impact of increased butter pricing on demand.

Dairy Crest’s functional ingredients business is progressing well and is successfully building momentum in securing a customer base in the infant formula market for demineralised whey and GOS through its partner, Fonterra.

Mark Allen, chief executive of Dairy Crest, comments: “We have had an encouraging first half, with Cathedral City, Clover and Frylight delivering good growth in both volumes and value. Cathedral City, the nation’s favourite cheese, continues to go from strength to strength and has produced exceptional growth over the period. We have delivered good profit growth despite a record high cream price, which has a temporary but significant impact on input costs in our butter and spreads business.”

He adds: “We expect to accelerate sales of demineralised whey and GOS in the second half of this year. In conjunction with our partner Fonterra we are making good progress in developing sales channels for our products. Our strong brands and the quality and efficiency of our operating facilities mean that we are well positioned to grow. While we expect butter input costs to continue to be challenging for the remainder of the year, we are confident in delivering our full year expectations.”