Dairy Crest Regulatory News (DCG)

28 Sep 2005 07:01

Dairy Crest Group PLC28 September 2005 28 September 2005 Dairy Crest Group plc Trading Update The Group is issuing the following trading update for the six months ending 30September 2005. The Group's profit expectations for the full year remain unchanged. During thefirst half of the year the Group has continued to make progress with its brandportfolio, benefiting from increased marketing investment, and has madestrategic acquisitions to strengthen the Dairies division. We highlighted in previous announcements that last year's changes in the freshmilk sector would adversely impact the performance of the Dairies division inthe current financial year. Therefore, as expected, Group profits for the sixmonths ending 30 September 2005 will be significantly lower than in the firsthalf of last year. Performance in the second half is expected to benefit from a firmer market forcheese, continued brand progress, recent business wins and the strategic dairyacquisitions made in the first half, although trading conditions remaincompetitive with oil related costs continuing to increase. FoodsWe have continued to make progress across our portfolio of key brands in theFoods division. Our key spreads brands Clover, Utterly Butterly, Country Life and St Ivel Goldare expected to maintain market share for the half year with the brandsdelivering differing levels of performance. We launched a major new marketingcampaign for the Country Life brand in August, with national televisionadvertising. This should accelerate the strong performance of this brand in thesecond half. Cathedral City, which also had new advertising on television, has delivered astrong performance and gained market share. During the half we have successfullyimplemented new own label cheese supply arrangements with both Asda andMorrisons, which have significantly increased our volumes with both retailers.The cheese business also achieved price increases with many of our customers. Asignificant element of this price increase has been used to increase the pricewe pay our milk suppliers on cheese contracts by an average of 0.8 pence perlitre since March 2005. Yoplait Dairy Crest's performance has been strong, resulting from good brandgrowth and the closure of the own-label operations in June. Yoplait Dairy Crestcontinues to invest in new product development and has recently launched PetitsFilous Plus, a probiotic drinking yogurt for children. DairiesAs expected, fresh milk volumes to major retailers were down in the first half.Volumes in the second half will benefit from the additional fresh milk businessgained from Morrisons, which commences at the end of October. We took action inMay to strengthen the Dairies division through the acquisitions of MidlandsCo-op Dairies and Starcross Foods Limited. The integration of these businessesis progressing to plan with the full benefits coming through towards the end ofthe financial year following the planned closure of the Birmingham dairy. Themajority of one-off acquisition related costs will therefore be incurred in thesecond half. In May we launched "St Ivel advance", a branded milk enriched withOmega-3, which has now achieved high levels of trade distribution. A televisionadvertising campaign will be launched shortly to support the brand'sdevelopment. The household business has performed in line with plan. We continue to work with Dairy Crest Direct and our other milk suppliers todeliver a sustainable long-term future for the industry. Our average raw milkprice on liquids contracts is now 0.45 pence per litre higher than at thebeginning of March 2005. Net debt at the half year is expected to be significantly above the level at 31March 2005 because of the acquisitions in the Dairies division and the normalseasonal outflow in working capital. Drummond Hall, chief executive of Dairy Crest, commented on the half-year todate: "We continue to make progress in developing our brand portfolio and have had agood first half in the Foods division. As expected, the Dairies division startedthe current financial year from a lower base following changes in retail supplyarrangements across the industry in 2004/5. We have strengthened this divisionwith the acquisitions of Midlands Co-op Dairies and Starcross Foods Limited andexpect the benefits to come through towards the end of the current financialyear. Overall, although trading conditions remain competitive with oil-related costscontinuing to increase, the Group's expectations for the full year remainunchanged." For further information, please contact: Dairy Crest Group plc 01372 472200Drummond Hall, Chief ExecutiveAlastair Murray, Finance Director Will Shaw, Investor RelationsSinead Noble, Media Brunswick 020 7404 5959William Cullum / Laura Cummings Notes to editors: Interim results for the six months ended 30 September 2005 will be announced on10 November 2005. Results for the financial year ending March 2006 and the six months endingSeptember 2005 will be presented under International Financial ReportingStandards ("IFRS"). A detailed presentation on the impact of restating theaccounts to IFRS is already available on the Dairy Crest websitewww.dairycrest.co.uk. A profit and loss account, balance sheet and cash flowstatement for the six months ended 30 September 2004 and the year ended 31 March2005 restated under IFRS together with reconciliation from UK GAAP will bepublished around the time of the interim announcement. This information is provided by RNS The company news service from the London Stock Exchange