Dairy Crest (DCG) is putting the £68m it raised via a share placing in May to use. Most of it has gone towards expanding the Davidstow creamery, with the aim of increasing capacity from 54,000 tonnes of cheese per year to 77,000 tonnes. Around half of this added capacity is planned for the UK, where Cathedral City accounts for 55 per cent of all cheddar sales. The rest will go towards international expansion, specifically Germany, China and the US, where bosses are "confident" of high demand for quality cheddar. As spending is phased over the next four to five years, management expects to see a return on invested capital (ROIC) of at least 20 per cent.
Statutory pre-tax profits fell 88 per cent to £17.8m, but this was heavily skewed. Last year’s £151m figure benefited from a £132m exceptional gain from the pension fund when the indexation benchmark was changed from retail price index (RPI) to the consumer price index (CPI). This year, one-off costs of £4.9m, along with the £3.2m spent on changing the IT system and £1.7m on operational changes at the Kirkby site, dented the bottom line.
Analysts at Numis expect pre-tax profits of £67.4m during the year to March 2019 giving EPS of 36.6p, compared to £62.3m and 36.7p in FY2018.
| DAIRY CREST GROUP (DCG) | ||||
| ORD PRICE: | 449p | MARKET VALUE: | £699m | |
| TOUCH: | 449-450p | 12-MONTH HIGH: | 605p | LOW: 441p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 208p* | NET DEBT: | 68% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 220 | 151 | 87.6 | 6.30 |
| 2018 | 225 | 17.8 | 9.7 | 6.40 |
| % change | +2 | -88 | -89 | +2 |
| Ex-div: | 03 Jan | |||
| Payment: | 31 Jan | |||
| *Includes intangible assets of £111m or 71p per share) | ||||
