Dairy Crest reports ‘good first half’ but plans to cut costs further

Chief executive Mark Allen (pictured) said: "Dairy Crest has enjoyed another good six months. In line with our strategy, we have continued to grow our brands, reduce our costs and control our debt. At the same time the improvements we have made to our quality, service and cost base have paid off with new contracts to supply fresh milk to major retailers. "Our strategy has proved successful in the challenging economic environment and positions us to deliver further value going forward. With operational efficiencies and selling price increases in certain categories limiting the impact of higher input costs, we are confident that we can continue to deliver profits in line with our expectations." However, higher sales of the company's five key butter and cheese brands – Cathedral City, Country Life, St Hubert Omega 3, Clover and FRijj – and of milk to major retailers were offset by lower sales of milk to the doorstep and smaller retailers. For the six months ended 30 September, overall sales fell 3% to £777m although pre-tax profit rose 6% to £36.1m. In what it described as "a challenging liquid milk market", Dairy Crest gained volumes as a result of changes in the supply arrangements of fresh milk to the major retailers and was successful in gaining a share of Tesco's fresh milk business, with supply commencing in December 2010. "We now have agreements to supply fresh milk in polybottles to six out of the seven major UK retailers, reflecting the improvements we have made to our quality, service and cost base," the company said.