Cost cuts at Express as results disappoint

By Robert Harris

EXPRESS Dairies is taking action to cut costs and boost productivity after reporting disappointing full-year results.

Tough competition in the industry hit performance, producing an underlying pre-tax profit of 43 million in the 12 months to 31 March, 2001, a fall of 18%.

Operating profit before exceptionals was 58.8m, down 6%, on a slightly reduced turnover of 913.4m, producing a return on sales of 6.4%.

Express blamed “under-recovery” of raw milk price increases passed back to farmers and a 9% annual decline in the doorstep sector.

A shortage of raw milk also affected the ingredients business.

Interest costs rose by almost 5m to 16m, mainly due to the Glanbia acquisition being included, for the first time, for the full 12 months.

Adjusted earnings per share were reduced to 10.6p, compared with 12.7p last year.

As announced recently, the board did not recommend a final dividend payment, leaving shareholders with just 3.38p, down 5.1p on the year-ago level.

Chairman Chris Haskins said he was pleased with the performance of supermarket sales which was helped by last years acquisition of Glanbia.

But the outlook for the coming year was tough, he added.

“We are taking initiatives to reduce our cost base this year by approximately 9 million, including the closure of the Wakefield and Lurgan facilities.

“We are reducing overheads across the entire business.

“We are also developing a new central administrative centre to handle all financial transactions which will deliver additional savings in 2002/3.”

Express has also explored new opportunities for its home delivery business, including the delivery of parcels for Parcelforce Worldwide.

It plans to extend a trial to three regions this autumn, handling up to 10,000 parcels a day.

The company is also expanding mail order catalogue delivery and continuing trials of a dry cleaning service.

Lord Haskins said that foot-and-mouth disease had imposed extra costs on processors, but its impact on milk supply had not been serious.

The supply of milk for ingredients manufacturing was “uncertain”, he said.

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