15 December 1995

Results show Dairy Crest in good shape

DAIRY Crest is in excellent shape and has turned in "very pleasing" half-year results, says chief executive John Houliston.

In the six months to Sept 30, turnover on continuing operations fell 10% to £355m, mainly due to the decline in doorstep milk deliveries and the firms cut in the scale of its ingredients business.

But operating profit rose 28% against the same period last year to leave £18.4m profit before tax. That compares with only £1m last year, although £16m was set aside for restructuring. "We are very pleased with the results. Profits and margins are up across the business despite a 14% increase in our milk costs since deregulation," says Mr Houliston.

He adds that Dairy Crest has now completed its business reorganisation, leaving this years balance sheet free of exceptional costs.

After a year in the free market, Mr Houliston says Dairy Crest has been transformed. Though it used to be the industrys "buyer of last resort", it can now operate on an equal footing with its competitors.

"Our main task now is to enhance the quality of our earnings by adding value both to our products and our service," he adds.

One step in this direction is Dairy Crests acquisition last week of the remaining 55% stake in Mendip Foods – one of the countrys leading cheese suppliers. Dairy Crest is now the sole owner and the acquisition will add premium cheese brands, like Cathedral City, to its portfolio.

Mr Houliston says there is still no indication of when, or if, Dairy Crest will be floated on the stock market. "That is up to the Resid-uary Milk Marketing Board, but as a management team we are absolutely convinced flotation is the best option." And he feels next summer will be the ideal time.

Dairy Crest still sources 80% of its milk from Milk Marque but Mr Houliston says the firm plans to increase both its direct-sourcing and the volume of milk it buys from other producer groups. &#42

Shelley Wright