FDBusiness.com

Dairy Crest has reported a 7% reduction in revenue from continuing operations to £688.2 million and a 10% drop in pre-exceptional profit from continuing operations to £29.4 million for the six months ended 30 September 2012. However, Dairy Crest recorded a post-tax profit of £47.7 million on the Eur430 million sale of its St Hubert French spreads business, which has allowed it to refocus on its UK operations. Dairy Crest’s exceptional restructuring costs of £29.7 million in the first half were significantly higher than the £2.7 million incurred last year.

Following the disposal of St Hubert, the UK dairy group has substantially improved its financial position, with net debt at the end of the period reduced to £75.8 million, down from £365.3 million at 30th September 2011. Dairy Crest expects net debt to reduce further during the next six months to around £60 million.

In line with its strategy, Dairy Crest is continuing to focus on growing its key brands, innovation and driving efficiencies across the business. The four key brands together recorded double digit volume and value growth and Dairy Crest’s UK spreads and cheese sales jointly rose by 3%.

Mark Allen, chief executive of Dairy Crest.

During the six months ended 30 September 2012 Dairy Crest made good progress to improve efficiency across the business and will achieve its annual cost reductions of £20 million ahead of target.

In its dairies business, Dairy Crest has closed two dairies at Aintree, Liverpool and Fenstanton, Cambridgeshire and 23 depots since the start of the financial year. The rationalisation of the group’s dairies manufacturing footprint has been facilitated by a three-year, £75 million capital expenditure programme for the liquid milk dairies. This will be completed in the second half on time and on budget.

“Dairy Crest has had a busy first six months as we continued to navigate a challenging trading environment. The decisive actions we have taken during the period leave us well placed as we move forward,” comments Mark Allen, chief executive of Dairy Crest. “The sale of St Huberthas created a more focused business and a much stronger balance sheet. We now have the ability to make UK acquisitions, but we will take time to ensure that any transaction creates value for our shareholders.”

He adds: “Despite the challenging environment we have continued to grow our key brands. We have reduced our cost base and made improvements to our dairies business. We expect this to benefit future profitability. We remain confident that full year performance will be in line with our expectations.”