Dairy Crest has made “significant progress” in transforming its business over the past financial year, the company announced in a trading update this week.

Growth in some of the processor’s key brands, including Country Life Spreadable, Cathedral City, and Frijj flavoured milk, meant trading for the year ending 31 March was in line with expectations.

However sales in some of Dairy Crest’s branded spreads suffered in 2006, reflecting a general decline in the UK spreads sector, the company said.

Utterly Butterly saw sales fall by 11% in the first half of 2006, while sales of St Ivel Gold dropped by 18% in the same period.

Dairy Crest said it would appeal to consumer interest in healthier foods to address the drop.

It is developing healthier versions of its popular brands, including Country Life Spreadable Lighter, which will be launched next month.

Dairy Crest said some “significant transactions” in 2006 meant it was in line with its strategy to improve the quality of it earnings and “reduce exposure to the commodity markets.”

The company bought French and Italian spreads business St Hubert from Uniq, and acquired Express Dairies, which created the UK’s leading doorstep and middle ground business.

It also sold the majority of its retailer brand cheese operations to First Milk.

Mark Allen, Dairy Crest chief executive, said he was “encouraged” by the performance of some of the group’s brands.

The company will report its full-year results on 22 May.