Profits and Sales Fall at Dairy Crest
Dairy Crest, the UK dairy foods processor, has reported a 4% drop in group revenue from continuing operations to £1.33 billion with adjusted profit before tax down 7% to £60.6 million for the year ended 31 March 2015. Dairy Crest incurred pre-tax exceptional charges of £36.3 million during the year and profit before tax dropped 59% to £22.1 million.
Dairy Crest is in the process of streamlining its activities and the businesses it is retaining – namely Cheese and whey and Spreads and butter – grew their product group profit by 19.3% to £66.9 million on sales up marginally (0.4%) at £448.2 million.
Dairy Crest announced last November that is has agreed to sell its Dairies operations to Müller UK & Ireland Group for £80 million. Dairies operations saw some volume declines along with significant price deflation and overall revenue fell by 6.7% in the year to £881.6 million. Profits in the Dairies operations reduced markedly in the year reflecting strong competition in liquid milk markets and sharp falls in commodity realisations. Profit dropped from £18.8 million in the prior year to £1.8 million.
The sale of the Dairies business has been approved by Dairy Crest shareholders but remains subject to the approval of the UK Competition and Markets Authority (CMA).
“This has been another year of significant progress for Dairy Crest. We have grown combined Cheese and Spreads sales despite the deflationary market environment. We have also delivered an encouraging improvement in the combined margin of these businesses,” comments Mark Allen, chief executive, Dairy Crest Group. “Our focus on product development has underpinned these results and our investment in a new innovation centre will support this. We have again met our target to deliver annual cost savings of over £20 million.”
He continues: “We have agreed to sell our Dairies operations. The conditional sale is a positive development for Dairy Crest and the wider UK dairy sector. Shareholders have approved the sale and the process to obtain regulatory approval is on track. Completion of the sale will result in Dairy Crest operating from five well-invested manufacturing sites. It will be a much simpler, more focused, predominantly branded business. It will also have exposure to the growing infant formula category and emerging markets.”
