Dairy Crest returns to profit
Dairy Crest returned to the black last year, posting a £55m profit, after making a loss the previous year.
The group recorded a revenue of £1.3bn for the year to 31 March 2013, down 9% on the year.
However, net debt fell 82% to £60m as a result of restructuring the business to focus exclusively on the UK, particularly in selling French spreads business St Hubert.
Analyst Shore Capital said it expected to see Dairy Crest buying other brands in the coming year, after paying back a large percentage of its debt. The dairies segment is likely to remain competitive, making Dairy Crest’s cost-cutting essential to its future performance, it added.
Dairy Crest put its successful year down to cost cutting and growth in key brands.
The Cathedral City brand was performing ahead of the market and Clover and Country life both gained market share.
The group also had finished a three-year £75m investment programme, closed two dairies, extended its major liquid milk contract with Sainsbury’s through to 2017 and reduced its exposure to less profitable contracts.
Chief executive Mark Allen said a sustainable supply of milk was of vital importance to Dairy Crest, which handles 2bn litres a year.
“In the face of some of the most challenging weather ever experienced by our farmers, and higher feed costs that have put pressure on their businesses, we were first to adopt a government-sponsored voluntary code of practice,” he said.
“In addition, we increased the milk prices we paid to farmers and introduced a ground-breaking contract which allowed them to opt for a formulaic milk price mechanism that provides greater transparency and reduces volatility,” he added.