Dairy Crest (DCG) stated ahead of its annual general meeting that it is on its way to meeting its full-year expectations. Combined sales volumes of the company’s four key brands – Cathedral City, Clover, Frylight, and Country Life – are 7 per cent ahead of the same time last year. This was driven mainly by a good period for cheddar cheese brand Cathedral City – its sales volumes were up 15 per cent on last year.
However, the update was not entirely smooth. Cream prices have increased “substantially” during the first quarter, which has put pressure on margins in the butter business since cream is a major input cost. The company has cut back on promotional activity for its butter brand Country Life in an effort to alleviate some of the margin pressure, although this is impacting volumes.
Chief executive Mark Allen reassured shareholders that despite the pressure on butter input costs the strong performance of the cheese business means that expectations for the year have remained steady. He added that the functional ingredients business has continued to grow and that they have added new customers, although contributions to profits from this area of the business will be weighted to the second half.
