Dairy Crest Regulatory News (DCG)

Dairy Crest Group plc ("Dairy Crest")

Trading statement

Dairy Crest is today providing its regular pre-close trading update. We will announce preliminary results for the year ending 31 March 2011 on 19 May 2011.

Profits in line with expectations

Dairy Crest's trading in our fourth quarter has remained strong and profit before tax for the year ending 31 March 2011 remains in line with our expectations.

We continue to benefit from being a broadly based business. This year a strong performance from our cheese business will compensate for more challenging trading in our spreads and dairies businesses.

Progress against strategy

Our strategy is to grow sales of our brands and other added value products, control our costs and generate cash.

All five of our key brands have increased sales this year and we have also increased sales through our doorstep delivery internet channel, milk&more. Our consistent commitment to advertising has been key to this improvement and we have again increased our expenditure in this area.

We have also sold more milk to the major supermarkets this year and have won an important contract to supply Tesco. However earlier this month we were unable to agree a suitable milk price with the Cooperative Group and, as a result, our fresh milk supply to them will end in August 2011. We believe we will be able to get a better return on the milk we had earmarked for this contract by selling it elsewhere and that there will be no resulting financial impact on our performance in 2011/12.

Our cost reduction programme has delivered annual savings ahead of the £20 million target we set ourselves at the start of the year.

Net debt will be lower at the end of the year than it was at the start.

Dealing with inflation

Input costs have increased steadily during the year and we are forecasting that this trend will continue. To partially offset this we have committed to another £20 million cost reduction programme for the next financial year. We are also making satisfactory progress to recover the balance of currently envisaged higher costs from our customers.

Mark Allen, Chief Executive of Dairy Crest, commented:

"This has been a year of strong progress for Dairy Crest in which we have consistently delivered on our strategy despite challenging trading conditions. We are well positioned with strong brands, tight cost control and an efficient supply chain."