Dairy Crest savings plans mean more site closures

Dairy Crest is planning the closure of more plants in a bid to further cut costs and streamline its operations.

Consultation is beginning with the 260 people employed at the company’s glass bottling dairy in Hanworth, West London, and a specialist cream potting facility in Chard, Somerset.

The closure of the two sites will contribute to achieving its annual savings target of £20m.

See also: Dairy Crest cuts both milk prices by 1.75p/litre

Dairy Crest’s Crudgington butter and spreads factory in Shropshire was already scheduled for closure and this would take place early in the second half of the year, said the company. The news of the closures was given as part of a trading update for the six months ending 30 September 2014, ahead of interim results on 6 November 2014.

In the statement, the company referred to the “challenging trading environment”, with cream prices down about 40% from autumn 2013 peak and skimmed milk powder prices falling almost 15% in August 2014. The dairies operation had made a loss in the period despite higher property profits.

Dairy Crest recently announced a 1.75p/litre cut in the manufacturing and liquid milk prices paid to farmers from 1 October.

Group profits for the first half of the year were expected to be broadly in line with those of last year and overall profit expectations for the full year ending 31 March 2015 were unchanged.

However property profits from the sale of surplus delivery depots would make up a greater proportion of profits than in the same period last year, it said.

Sales of Dairy Crest’s four key brands, Cathedral City, Clover, Country Life and FRijj, together grew by 4% in the first quarter compared with the first quarter of the year ended 31 March 2014 and similar growth rate for the whole of first half was expected.

The company’s demineralised whey and galacto-oligosaccharide projects, which would enable it to manufacture products for the growing global infant formula market, were on track to boost profits in the next year but the investment in these projects would result in higher net debt at 30 September 2014 than at 31 March 2014.