There weren't many surprises in Dairy Crest's half year results, after a trading update in September reassured the market that it hadn't fallen victim to the industry pressures that forced rival Robert Wiseman to issue a severe profit warning.
Even so, these latest figures demonstrate the advantage Dairy Crest enjoys as a result of its more broadly spread business. While its dairies division was able to secure new liquid milk contracts from major supermarket customers and report higher volumes, operating profit margins were squeezed by competition, falling 60 basis points to 2.1 per cent. But the resulting drop in the division's operating profits, from £14.3m to £10.9m, was comfortably offset by a solid performance from its cheese business, where profits climbed 58 per cent to £12.5m even though sales were £22.9m lower after the disposal of low-margin Wexford Creamery.
Strong cashflow meant the group was able to shave another £30m from its debt since the March year end, and ongoing cost saving programmes are expected to save another £20m this year, underpinning full year profit expectations.
Broker Peel Hunt expects adjusted pre-tax profits of £88.5m and EPS of 48.6p in the year to March 2011 (from £83m and 46.5p last year).
DAIRY CREST GROUP (DCG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 367p | MARKET VALUE: | £ 489m | |
| TOUCH: | 365-367p | 12-MONTH HIGH: | 422p | LOW: 328p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 9 | |
| NET ASSET VALUE: | * | NET DEBT: | £336m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 804 | 34.0 | 18.6 | 5.30 |
| 2010 | 777 | 36.1 | 19.8 | 5.50 |
| % change | -3 | +6 | +6 | +4 |
Ex-div:05 Jan Payment:27 Jan *Negative equity shareholders' funds | ||||
