When exceptional items, amortisation of acquired intangibles and pension interest, were taken into account, however, Dairy Crest made a £10.1M loss.
The company’s food division put in a strong performance (+10%), offsetting poor results from dairy (-2%).
“Dairy, however, is no worse than we were expecting and remained in profit, albeit with the help of some higher than normal property profits [all in the first half],” said Investec Securities analyst Nicola Mallard.
Food brands, such as Cathedral City Cheddar and its French spreads business St Hubert, performed well, with the anticipated improvement in volumes coming in the second half of the year after a tougher first half, said Mallard.
According to Dairy Crest, 10% of its sales are now derived from products and services developed over the past three years, such as Chedds and Frijj.
“Dairy still faces some serious challenges this year, but with ‘decisive action’ (closing dairies and we expect further milk price cuts to farmers) management hopes to produce a better medium-term return,” she added. “We are forecasting unchanged dairy profits this year, but FY14 [financial year 2014] should be better.”
Dairy Crest added that input cost increases of around £80M had been recovered through cost savings and price increases, while £22M of annualised cost savings had been delivered during the year, with a further £20M identified for 2012/13.
“Dairy Crest’s results for the year demonstrate the continued benefit of being a broadly based business,” said Mark Allen, chief executive of Dairy Crest Group. “Double digit growth in our branded spreads and cheese businesses has offset unsatisfactory results in dairies.”