Cost-cutting pushes up Dairy Crest profits

The company, which is the UK's leading chilled dairy foods company, operates in two divisions, foods and dairies, and said that the strong performance from the dairy sector had been partly offset by lower profits from cheese and spreads in the food division. While the dairy division benefited from lower costs over the year, the cheese and spreads divisions incurred more expenditure on marketing and advertising as well as lower profits. In a trading update, Dairy Crest outlined its three areas of strategic importance for future growth and placed particular importance on its five key brands, including Cathedral City cheese and Clover spread, as well as increasing milk sales to retailers and its web-based doorstep delivery initiative, milk&more. The company said that cost reduction remained a key part of its strategy and it continued to seek efficiency improvements across the business. It had further developed its plans to support key customers by investing £75 million over the next three years upgrading Dairy Crest's liquid milk dairies. Redundancy consultations with staff at the company's Kirkby spreads factory and at its warehouse at Nuneaton had been completed. Plans previously announced to drive operational efficiencies in the household business were progressing to plan and a more detailed update would be provided when Dairy Crest formall reports its financial results in May. Dairy Crest also announced the end of its defined benefit pension scheme. Chief executive Mark Allen (pictured) said: "Stronger brands, a lower cost base and increased focus leave us much better placed than a year ago".