The deflationary brawl among Dairy Crest 's (DCG) end customers may be about to turn. Supermarkets have been viciously competing on price and this is evident in the cheese and spread maker's numbers. Sales dropped as the price of its goods fell a total of 8 per cent with the biggest fall of 11 per cent being felt in recently rebranded Cathedral City cheese. Group volumes were better, up 2 per cent across the board, although again its cheese suffered a 5 per cent drop, partly because management chose "not to discount too aggressively".
But finance director Tom Atherton said recent oversupply of milk and cheese was "starting to tighten", which means prices should rise in the second half. Although the top line struggled, profits leapt thanks in part to the group's steep drop in capital expenditure to £10.1m from £35.5m in the comparative half. This helped produce a positive operating cash flow (before exceptional items but after capex) against an outflow in the first half of 2015, something Mr Atherton was confident could be sustained.
House broker Shore Capital expects pre-tax profit of £61.5m in the year to March 2017 leading to EPS of 35.8p compared to £57.7m and 34.2p in FY2016.
| DAIRY CREST (DCG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 597p | MARKET VALUE: | £842m | |
| TOUCH: | 597-598p | 12-MONTH HIGH: | 700p | LOW: 503p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 20 | |
| NET ASSET VALUE: | * | NET DEBT: | £262m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 204 | 13.1 | 7.6 | 6.1 |
| 2016 | 190 | 15.6 | 9.3 | 6.2 |
| % change | -7 | +19 | +22 | +2 |
Ex-div: 5 Jan Payment: 26 Jan *Negative shareholder funds | ||||
