Dairy Crest Achieves 24pc Rise in Profits

DAIRY CREST, producer of Cathedral City cheese and Clover spread has seen a 24 per cent rise in full-year profits after raising prices and cutting costs to offset rising commodity pressures.

The Surrey-based group said yesterday that double-digit increases in sales of its flagship cheese and spread brands lay behind the better-than-expected improvement in underlying pre-tax profits, to Pounds 96.1m.

Dairy Crest has increased doorstep delivery milk prices from around 53p a pint to between 55p and 59p a pint since last September, with prices for its cheese and spreads also up amid annual dairy price inflation of more than 13 per cent.

The group has been battling against soaring food, fuel and commodity costs, while demand for the doorstep delivery service has waned.

But Dairy Crest, which owns doorstep milk delivery business Express Dairies, said it had begun to halt the decline in milk- round sales.

Initiatives have helped to limit the drop in underlying sales to below seven per cent, down from falls of more than 11 per cent four years ago, according to Dairy Crest.

The firm added that it was to extend its “milk&more” Internet delivery service nationwide this year after a trial in South East London.

Customers across the majority of its 160 depots will be able to order milk and products such as organic vegetables, bread and fruit juice over the Internet for delivery as part of its aim to revive the doorstep market.

Dairy Crest said customers, on average, bought 45 per cent more products through the new service.

It hopes to boost its 1.5 million milk round customer base as the online service rolls out, even though it introduced “significant” price rises last autumn and confirmed yesterday it increased prices again at the beginning of this month.

It has also passed on higher costs to its supermarket clients – the “big-four” chains Tesco, Bradford-based Morrisons, Sainsbury and Leeds-based Asda, as well as Waitrose and Marks & Spencer.

Dairy Crest said it had continued to help farmers, who face higher on-farm costs, with increases in cheese and milk prices paid from this month.

Analysts at Panmure Gordon said in a note that Dairy Crest had enjoyed a “good year”, despite the challenges presented by significant inflation in raw milk prices and production costs.

The note added: “The high quality portfolio of leading dairy brands has once again helped the group to mitigate inflationary effects through the justification of price rises.”

Dairy Crest’s Cathedral City cheese saw sales rise 23 per cent in the year to the end of March, while sales of Country Life Spreadable increased 25 per cent and Utterly Butterly by 29 per cent.

Total revenues in the 12-month period lifted 20 per cent to Pounds 1.57bn.

Clover saw a 11 per cent fall in sales last year after a product recall in May 2007 hit demand, but Dairy Crest said sales were back up to pre-recall levels last month. A new version of Clover is to launch this year.

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