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Dairy Crest expects £10m profit from milk depot sale

Dairy Crest expects £10m profit from milk depot sale

Dairy Crest anticipates it will report full-year profits ahead of market expectations, thanks to a £10 million cash injection from the sale of its Nine Elms milk depot. 

This is according to its interim management statement covering the nine months to December 31st 2013.

The sale of the residential and middle ground milk depot in London for £17.6 million will generate a profit of £15 million. 

In a statement, the company said: “We now anticipate that profits from the sale of properties will total around £18 million this year, £10 million ahead of previous expectations.”

However, the spreads market proved to be challenging, with the company reporting profits below previous expectations. 

The company said that the spreads market changes will increase adjusted profit before tax. This means £2.5 million will be paid in bonuses to 1,200 employees and will result in profits ahead of expectations in March 2014.

Meanwhile, sales of Dairy Crest’s four key brands - Cathedral City, Country Life, Clover and FRijj - increased by four per cent. The company believe the rise was driven by the strong momentum of the Cathedral City brand.

City analyst Panmure Gordon thought the financial performance “broadly in line with expectations”.

According to Foodmanufacture.co.uk, analyst Damian McNeela agreed that underlying trade conditions remain challenging for Dairy Crest. However, the cost savings and momentum in cheese spreads should help to alleviate this pressure.

While the four per cent growth of the firm’s key brands represented a one per cent increase at the interim stage, third quarter sales had dropped to seven per cent from eleven per cent.

Mr McNeela added: “The outturn reflects another strong performance from Cathedral City delivering double digit volume and value growth over the period – although the third quarter of last year provides an easy comparison.” 

Panmure Gordon issued ‘hold’ advice on Dairy Crest stock.

Mark Allen, chief executive officer of the business, described the firm’s third quarter performance as solid, as the combined sales of its four key brands continuing to grow. 

“Innovation continues to support the development of these brands and our new launches are performing in line with our expectations,” he said

 

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