Dairy Crest moots 'sudden' inflationary pressures

Cheese and butter maker Dairy Crest said that sudden cost inflation across all dairy markets is likely to have an impact on butter volumes and margins in the second half, after first-half profits were up on the previous year.

The FTSE 250 group said that for the full year its guidance remained unchanged.

that three of its four key brands, Clover, Country Life and Frylight had all shown strong volume growth and continued to increase market share in the first half, while the relaunch of Cathedral City as a more premium brand with a lower discount than rivals was likely to result in a small volume decline but improved margins.

For the second half Cathedral City is expected to see improved volumes.

Overall for chief executive Mark Allen it was a good performance and he was pleased with the "very positive customer response to the Cathedral City refresh which should underpin future growth of the brand".

He added: "Recently we have seen inflation across all dairy markets. To date we have announced increases amounting to 12 per cent in the milk price we pay our farmers. Cream prices have been particularly affected, doubling over a very short period. This sudden cost inflation is likely to have an impact on butter volumes and margins in the second half.

"As a strong branded and added value business, Dairy Crest is well placed to deal with inflationary pressures. As such our outlook for the full year remains unchanged."