Dairy Crests churns out bad news

Published on Monday 10 November 2008 21:39

COUNTRY Life butter maker Dairy Crest yesterday warned that its full-year profits would be 10 per cent down on last year because of higher milk costs and the economic slump.

The firm, which reported "double digit" sales growth for Cathedral City cheese and Country Life in the first half, described conditions as increasingly tough. Adjusted pre-tax profits for the six months to 30 September increased 4 per cent to 38.5 million while revenue rose 6 per cent to 808m.

The figures were in line with expectations, but shares tumbled as investors reacted to the reduced profits guidance from the company.

Investec Securities analyst Nicola Mallard said: "Although the group says it is not seeing a big move from brands to own label, it is seeing an increase in sales on promotion, which hits margins."

Despite the tougher trading conditions, Dairy Crest said it was important that it continued to invest in its brands through media campaigns.

The foods division, which also sells Clover and spread product St Hubert, achieved a 47 per cent increase in underlying profits to 46.7m on revenues of 304m in the half year.

In the company's dairies business, profits were down to 2.7m from 13.5m.