Sterling's strong rise on currency markets restrained growth in first half profits at the Dairy Crest group by lowering the cost of imported commodity cheese, butter and skimmed milk powder acquired from overseas concerns, notably Irish processors. But additional growth has been achieved in added-value bus inesses benefiting from continuing investment in "brand" development.
First half pre-tax profits increased 13 per cent to £18.7 million on turnover, up 3 per cent at £392 million. The interim dividend is up 7.4 per cent at 3.5p on earnings per share, up 12 per cent at 11.8p.
Operating profits increased £1.8 million to £14.7 million at the consumer foods division, benefiting from "brand" growth, but in food services profits declined £1 million to £5.4 million, reflecting the affect of strong sterling on the ingredients market.
Dairy Crest says the addedvalue mature and farmhouse cheddar sector of the cheese market has continued to grow, increasing by 5 per cent to more than £500 million in the past six months.
Benefits from lower raw milk costs were eliminated by reduced selling prices in competitive trading conditions. Like other dairy firms, Dairy Crest is concerned by the direct move of raw milk supplier Milk Marque into milk processing through purchase of a small Welsh cheese factory, complementing its employment of dairy firms in Ireland and the UK to process its surplus milk.
Dairy Crest directors have called on the Office of Fair Trading to examine Milk Marque's new role as cheese processor in the hope it will recommend a full investigation of Milk Marque by the Monopolies and Mergers Commission.
