Competition is blamed for halved profits
OVERCAPACITY and strong competition in the marketplace are blamed by Express Dairies for a near-halving of first-half profits.
Pre-tax profit fell 43% to £13.3m in the six months to Sept 30, while turnover increased by 1%, to £437m.
Chairman, Lord Haskins, blames new capacity in an already oversupplied market, and declining doorstep deliveries.
Express has cut 1250 jobs, but says planned cost savings of £9m are being delivered, with £2m more in the next financial year.
An interim dividend will not be paid, but Lord Haskins believes there are better times ahead. "We retained our position as the leading UK supplier to the major retailers, gaining market share albeit at the expense of margins."
Share value dropped by 20% in March after a profits warning, and has declined ever since. The midweek value was just 18.25p, compared with the 73.5p year-high seen in February.
Meanwhile, rival company Robert Wiseman Dairies has announced a pre-tax profit of £9.5m, in line with last year. Sales increased by 22%, to £178.5m, helped by the purchase of Bristol-based Lordswood Dairies in May.
"Competition for supermarket business is intense, and margins will remain under pressure in the second half of this financial year," says chairman, Alan Wiseman.
But the new dairy processing plant at Droitwich Spa, with an ultimate capacity of 500m litres/year, has already won new business from Somerfield and Safeway. Mr Wiseman expects further growth from these new contracts, and trials with Sainsbury are due next year. *