FIRST half profits at Dairy Crest will be slightly higher than last year, the dairy foods group said in a trading update today.
Liverpool stockbroker Panmure Gordon shifted its stock recommendation from ‘sell’ to ‘hold’ on the strength of the update for the six months to September.
The group, which operates a milk depot at Aintree’s Long Lane and a spreads factory in Kirkby, said higher property profits will boost its bottom line for the half year.
It said trading has been in line with expectations so far, with efficiencies and an increase in selling prices offsetting higher raw materials costs.
Today’s update revealed that sales of the group’s five key brands – Cathedral City, Country Life, Clover, St Hubert, St Hubert Omega 3 and Frijj – continued to increase, despite pressure on consumers’ pockets, although volumes will be lower than in the same period last year.
Four new products are also being introduced, including new children’s cheese snacks Chedds, new flavours of the branded milk shake Frijj, a St Hubert non-dairy cream, and a spread that contains seeds.
And while the group has increased milk sales to major retailers, strong competition in the retail markets has hit doorstep sales.
Chief executive Mark Allen said today: “We are pleased that we continue to perform as expected in this tough environment.
“In the first half our broad base, high quality brands and ongoing cost saving measures have allowed us to balance the conflicting demands of increased input costs and subdued consumer spending.
“At the same time, we are investing for the future, with new products and upgraded facilities.
“Overall, we remain confident of delivering full years profits in line with our expectations.”
Panmure Gordon analysts Damian McNeela and Graham Jones added: “The company has been one of the few companies in the sector not to provide a negative trading update, with its portfolio of five key brands achieving sales growth of 5%.
“We believe the shares are now more fairly valued . . . and, consequently, we move from sell to hold but retain our 350p price target.”
