Full year results from Dairy Crest tell a familiar story: the core dairies business continued to struggle in the face of fierce competition and inflationary pressures, but that was offset by good performances from its branded cheese and spreads and meant underlying pre-tax profits were flat at £87m.
That's an impressive feat given the group faced inflationary pressures of £80m over the year. Those sizeable input price hikes were recovered by price increases in branded products, and cost savings, of which £22m were delivered in the 12 month period. A further £20m of savings will be delivered in the current financial year, while plans are in place to improve dairy profits - which fell 62 per cent to just £10.2m in the year - to an "acceptable" level in the coming years. These include the closure of two dairies announced after the year-end, the withdrawal from some low margin business, and some cuts to milk purchase prices as a result of recent falls in dairy commodity prices.
Meanwhile, a good performance from its French business St Hubert should help Dairy Crest achieve a good price should the business be sold as expected. However, reflecting the challenging outlook for the Dairy business, analysts at Panmure expect EPS to fall from 49.4p to 46.7p in the year to March 2013.
DAIRY CREST GROUP (DCG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 324p | MARKET VALUE: | £ 432m | |
| TOUCH: | 323-324p | 12-MONTH HIGH: | 405p | LOW: 287p |
| DIVIDEND YIELD: | 6.3% | PE RATIO: | NA | |
| NET ASSET VALUE: | * | NET DEBT: | £336m | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.57 | 66.0 | 40.2 | 24.4 |
| 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 | 1.63 | -10.1 | -12.8 | 20.4 |
| % change | +2 | - | - | +4 |
Ex-div:20 Jun Payment:02 Aug *Negative equity shareholders funds | ||||
