Dairy Crest has today issued a pre-close trading update for the six months ending
30 September 2017, ahead of announcing its Interim Results on 9 November 2017.
In the first half of the financial year, the firm expects that combined volumes of its four key brands - Cathedral City, Clover, Country Life and Frylight - will be ahead of last year. Combined value growth of these brands is expected to be higher than volume growth. Cathedral City, the UK's leading cheese brand, is expected to deliver double-digit volume growth in the first half.
Cathedral City, Clover and Frylight continue to show strong volume growth. As previously stated, as a result of higher cream prices, which determine input costs for the butter business, Dairy Crest has reduced promotional activity on Country Life. Whilst this has impacted sales volumes, it has partly mitigated the adverse impact on margins.
In conjunction with its partner, Fonterra, the group continues to make good progress developing the customer base for its demineralised whey and galacto-oligosaccharide. Dairy Crest will start to benefit from this in the second half of the year.
Mark Allen, Chief Executive, commented, 'Cathedral City has had a strong first half of the year, delivering good volume and value growth and strengthening its position as the nation's favourite cheese. This performance has more than offset the impact of further input cost inflation in the butter business.
'Overall, first half profits are expected to be ahead of last year. Our profit expectations for the full year are unchanged despite input costs remaining high. The strength of our brands and focus on quality, innovation and efficiencies mean that we remain well positioned to deal with market conditions.
'We continue to focus on cash generation and on reducing net debt in the full year. The agreement reached with the Trustee of the Pension Fund is an important development and significantly reduces future funding liabilities.'