JPMorgan downgrades Dairy Crest to 'neutral'

The bank said Dairy Crest’s results on Thursday showed the group achieved positive volume growth in its key brands in the first half, despite a decline in the flagship Cathedral City cheese brand.

“This was achieved against a deflationary backdrop and with some operational teething problems in functional ingredients,” JPM said.

It cut its pre-tax profit estimate for full-year 2017 by 2% to £61.5m to reflect a reduced contribution from functional ingredients. However, it lifted its forecast for FY18 by 1% to £68.4m to reflect increased margin expectations.

Dairy Crest said on Thursday that adjusted pre-tax profit in the first half rose 19% to £19.1m as the group underwent a restructuring.

Revenue fell 7% to £190m in the six months ended 30 September, reflecting deflationary pressures in its markets.

At 0840 GMT, the shares were down 0.4% to 600.50p.