AGM and Interim Management Statement
Anthony Fry, Chairman of Dairy Crest, will make the following Interim Management Statement at the Company’s Annual General Meeting later today.
Trading in line with expectations and St Hubert sale creates opportunities
As expected it has been a difficult quarter for our Dairies business, along with the rest of the sector. However, we have taken decisive steps to return it to a satisfactory level of profitability. We have set a medium term target of 3% return on sales and are making progress towards it. Plans to close two dairies announced in April are on schedule and resulting capacity reductions are allowing us to improve selling prices in parts of this business. Lower returns from commodity cream markets have also led us to announce milk purchase price cuts. Regrettably these cuts have put pressure on our supplying farmers and we are working with them on plans to reduce the impact of these cuts. These plans include the early adoption of a new code of practice in relation to our milk supply contracts.
As announced on 29 June 2012 we have received a binding offer for our French spreads business, St Hubert, for €430 million (£344 million). If the proposed transaction completes, the proceeds of this disposal will substantially reduce our net debt. From a strengthened financial position we will then consider a range of options taking into account the interests of all stakeholders.
Total sales of our four UK key brands (Cathedral City, Country Life, Clover and Frijj) have increased by 15% compared to the same period last year. We continue to increase our investment in marketing these brands and for the first time all four brands will feature on television in the first half of the year.
We remain committed to making efficiency savings of £20 million this year and are on track to meet this target.
Mark Allen, Chief Executive, commented:
"Our focus at the start of the year has been on doing the right things to restore our Dairies business to a satisfactory level of profitability as well as to continue to grow our brands and we are pleased with the progress we are making.
At the same time we are taking another significant step in the evolution of Dairy Crest by following through our strategic decision to dispose of St Hubert and refocus on the UK."
Dairy Crest's Annual General Meeting will be held today at midday at the offices of Eversheds LLP, 1 Wood Street, London EC2V 7WS.
Dairy Crest expects to issue its half-yearly trading update on 24September 2012 and its Interim Results for the six months ending 30 September 2012 on 8 November 2012.
For further information:
020 7404 5959