DC profits fall, but still on track

Dairy Crest is the second large milk processor to post slimmer profits this week on an increased turnover for the first half of the year.

The dairy company saw its pre-tax profits slip more than 25% in the six months to October, reaching £26.1m, broadly in line with analysts’ expectations.

Turnover rose to £642m, up £12m on the same period in 2004.

Earnings from milk processing rose, despite the loss of Tesco business, as extra volumes from Morrisons and the recently-acquired Midlands Co-op Dairies came on stream.

But overall group revenue fell, as a result of the termination of a fresh dessert joint venture with Yoplait in Yeovil, Somerset.

Chief executive Drummond Hall said higher oil prices had pushed up costs, but predicted no change in full year results.

“The dairies division has been strengthened by acquisitions and we expect the full benefits to come through towards the end of the current financial year.

“We continue to make progress in developing our portfolio of brands in both the foods and dairies divisions, with particular recent focus on new product activity in dairy functional foods.”

Weak cream and manufacturing milk prices lead DC to cut its raw milk price twice this autumn, but current levels are guaranteed until March.

Cheese price rises achieved earlier in the year are also expected to boost second-half earnings.