LONDON (Alliance News) - Dairy Crest Group PLC Thursday reported a drop in pretax profit in the first half of its financial year as a sales decline in the spreads and butters division offset a stronger cheese business, but the company said the sale of its loss-making dairies operations will lead the business to future growth.
The FTSE 250-listed firm said pretax profit in the half year ended September 30 fell 13% to GBP13.1 million from GBP15.0 million in the same period the year before, as revenue declined 5.3% to GBP203.8 million from GBP215.3 million.
Dairy Crest said a strong performance from cheese was offset by a weak performance from spreads and butters, against a strong comparative period the year before.
Dairy Crest said however that the recently approved sale of its dairies operations to Muller UK & Ireland Group LLP will leave the company well-positioned for long-term profitable and sustainable growth alongside strong cash generation.
The GBP80 million disposal is due to complete on December 26, and Dairy Crest said it expects sale proceeds to be in the range of GBP40 to GBP50 million. The deal received approval from the UK Competition and Markets Authority late last month.
"Following the sale of our Dairies business, Dairy Crest will be a predominantly branded, simpler, more focused business with a significantly reduced overhead base. Future sales of ingredients for infant formula, which will start in the second half, will provide added impetus," Chief Executive Mark Allen said in a statement.
Dairy Crest will pay an interim dividend of 6.1 pence, a 2% rise on the 6p paid the prior year.
"We highlighted early in the current financial year that profits would be weighted towards the second half. With the benefit of lower cheese costs and an expected improved performance from our spreads and butters business in the second half, our full-year expectations remain unchanged," Allen said.
"We expect the increased focus on growth and cash generation to allow us to maintain our strong track record of rewarding shareholders with higher dividends," he added.
Shares in Dairy Crest were trading down 1.2% at 635.50 pence Thursday morning.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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