Dairy Crest posts £2.9M profit growth

Dairy Crest announced its full year results this week

Dairy Crest has posted a £2.9M rise in adjusted profits to £60.6M in its first full tax year since selling its dairies business, while sales for the company fell.

The company made profits of £1.4M – after tax – from the sale of its dairies business to Müller, which was completed in the 2015/16 tax year.

However, profit before tax dropped 11% to £40.3M in the year ending March 31 2017.

Profits had taken a hit from a rise in exceptional charges in the company to £19.1M, up from £11.3M last year. The cost were mostly related to the building and commissioning of new facilities at the Davidstow creamery in Cornwall.

Sales saw a 1.3% decline last year, down to £416.6M from £422.3M in the previous year. Dairy Crest blamed the decline on a deflationary market place for more than three quarters of the year.

Cheese and whey sales fell 3.4%

Dairy Crest’s cheese and whey sales fell 3.4%, while the butter, spreads and oils category’s sales dropped by 1.2% – a total of £10.8M less than last year.

Other revenues – comprised mainly of warehousing and distribution services provided to third parties – helped boost sales by £5.1M.

Dariy Crest’s final dividend per share grew 2% to 16.3p, up from 16.0p last year – total dividend per share for the year was to 22.5p, up from 22.1p.

Chief executive Mark Allen said Dairy Crest had delivered a robust performance in a tough market.

“Our industry leading margins are the result of our focus on driving long-term value through brand building, innovation, investment in a world class supply chain and strong cost control,” said Allen.

‘Focus on driving long-term value’

“Developing our sales of demineralised whey and GOS [galacto-oligosaccharide] into the high-margin global infant formula market will be a key priority this year. At the same time we will continue our research into other potential animal and human applications for GOS.”

Allen described the business as a “much leaner, more focused organisation”, following the sale of its dairies business to Müller UK & Ireland.

Dairy Crest’s key brand were performing well, claimed Allen, with Cathedral City remaining “the nation’s favourite cheese” following a brand refresh at the start of the year.

Allen added: “Looking forward, I am excited about the future for Dairy Crest. The business is well positioned to deliver profitable, sustainable growth and stronger cash generation. This underpins our commitment to growing our dividends and reducing debt.”

 

Dairy Crest results – at a glance

 

2017

2016

Change

Revenue

£416.6M

£422.3M

-1%

Adjusted profit before tax

£60.6M

£57.7M

+5%

Profit before tax

£40.3M

£45.4M

-11%

Adjusted earnings per share

35.6p

34.5p

+3%

Basic earnings per share

23.7p

27.9p

-15%

Net Debt

£249.8M

£229M

+9%

Final Dividend

16.3p

16p

+2%

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