Dairy Crest (DCG) looks in better shape that it did a year ago. The group sold its French spreads division for £341m, rationalised the dairies business and restructured its management. A £75m three-year investment programme, to improve efficiency and slash net debt, was also completed. Strip-out £56.5m of restructuring-related exceptional costs and full-year pre-tax profit actually rose 7 per cent to £50.6m.
That restructuring also included the closure of two dairies and the consolidation of two spreads manufacturing facilities into one. Moreover, 28 distribution depots were shut in response to declining doorstep deliveries - helping Dairy Crest to achieve £23m-worth of cost savings in the year, which beat its £20m target. Accordingly, Dairy Crest is now able to invest in growth and management has hinted that it's looking at expanding the whey business into "more attractive markets", such as sports nutrition - which follows in the footsteps of Irish dairy rival, Glanbia.
Still, increased milk costs meant operating profit at the cheese business fell 6 per cent to £33m - even though revenue here rose 0.7 per cent to £231m. While sales at the spreads and dairy units fell 8 per cent and 11 per cent, respectively - although profits at both increased thanks to cost savings and cheaper vegetable oil.
Investec Securities expects adjusted pre-tax profit of £64m for 2014, giving adjusted EPS of 37.7p (2013: 29.9p).
| DAIRY CREST (DCG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 471p | MARKET VALUE: | £642m | |
| TOUCH: | 470-471p | 12-MONTH HIGH: | 482p | LOW: 312p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | na | |
| NET ASSET VALUE: | 225p* | NET DEBT: | 19% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.65 | 103 | 56.8 | 20.1 |
| 2010 | 1.63 | 77.8 | 40.6 | 18.9 |
| 2011 | 1.60 | 77.8 | 43.2 | 19.7 |
| 2012** | 1.51 | -41.7 | -21.9 | 20.4 |
| 2013 | 1.38 | -0.40 | nil | 20.7 |
| % change | -9 | - | - | +1 |
Ex-div: 26 Jun Payment: 1 Aug *Includes intangible assets of £104.8m, or 77p a share **Restated for August 2012's disposal of the St Hubert business | ||||
