Dairy Crest remains optimistic

“UK-based Dairy Crest says that is full year financial expectations remain unchanged following its third fiscal quarter despite increased milk costs and a £9.4m (€12.6m) fine for alleged anti-competitive practices.

The cooperative said that a 40% increase in sales from its food division and increased prices for its products has allowed the group to meet full year profitability.

Group chief executive Mark Allen says the group’s core brands had been key contributors: “There was strong performance of a number of key brands including Cathedral City, Utterly Butterly, Petits Filous and St Hubert Omega3.”

Cathedral City cheddar posted double-digit growth that amounted to £150m (€201m) in retail sales. Sales volumes for the spread brand were negatively impacted in the first fiscal half, after the company was forced to recall the product in May amidst fears of mould contamination.

Revenues were also up for the group’s dairy division, which rose 13 per cent over the three months. Dairy Crest attributed the growth to strong volumes sales over the Christmas period and the impact of price increases. The price hikes reflected the higher cost for raw milk, the group says.

In December, the company reached an early resolution agreement with the UK office of Fair Trading (OFT) after alleged price fixing between 2002 to 2003. Dairy Crest says that the agreement meant that it now expected to pay a significantly reduced fine of about £9.4m over the investigation into its “milk price initiatives”. The amount will be deducted as an exceptional item during the current financial year ending 31 March 2008.