Dairy Crest first half in line, full-year outlook unchanged

In a statement for the three months to the end of June ahead of its annual general meeting later in the day, the group said that combined sales of its four key brands - Cathedral City, Clover, Frylight and Country Life - are 7% ahead of the same period last year. Cathedral City, Clover and Frylight have all grown strongly but Cathedral City has seen the strongest growth, with volumes up 15% on last year.

Dairy Crest pointed out that cream prices, which determine input costs for the butter business, have risen "substantially" in the first quarter, which will put pressure on margins in the butter business. In addition, it said the reduction of its promotional activity on Country Life is adversely impacting volumes but mitigating some of the margin pressure.

Chief executive Mark Allen said: "The year has started well and our branded business has delivered good growth in the first quarter. The functional ingredients business continues to progress well and new customers are being signed up. We still expect that the profit contribution from this business will be second half weighted.

"Dairy Crest is well positioned for long-term sustainable profit growth. Despite the pressure on butter input costs, the strong performance of our cheese business means that our expectations for the year remain unchanged."