DAIRY CREST announced this week (w/e Sept 24) that it had bought the outstanding 44% minority in the English Butter Marketing Company for £4m, allowing it to accelerate development of the Country Life brand.
English Butter had been owned by Associated Co-operative Creameries, the company recently bought by Dairy Farmers of Britain, and The Cheese Company – mostly owned by Milk Link.
The latest trading update from the Dairy Crest Group for the six months ending Sept 30, 2004 repeated its August warning of dipping profits next year due to the tough multiple retailer market.
While liquid products traded well in the first half of this year, the company said it was disappointed by Tesco‘s decision to end its supply arrangement for fresh milk in the first quarter of 2005.
Chief executive Drummond Hall said the priority over the next six months was to address the ongoing profitability of the fresh milk business.
While Tesco‘s timing would limit the impact in the current financial year, it would have a significant impact on the following one.
Dairy Crest also blamed the tough own brand market for the demise of the Yoplait dairy Crest Enfield factory early next year.
Overall, a good spreads performance and steady cheese prices, coupled with extra growth for mature Cheddar Cathedral City, meant underlying pre-tax profits for the first six months of this financial year were expected to show good growth on the same period last year.
Dairy Crest‘s share price rose 1.5p to 326.50 by Wednesday afternoon.