Dairy Crest’s four key brands – Cathedral City, Clover, Country Life and Frylight – have all experienced broadly flat sales over the nine month period.
The firm also looks set to benefit from production of demineralised whey powder and galacto-oligosaccharide at its Davidstow site, Shore Capital said.
“At this stage Dairy Crest is building inventory levels, with shipping expected to commence at the start of the 2017 financial year,” its analysts Darren Shirley and Clive Black said.
£6M earnings
“We are encouraged that despite the ongoing weakness in the global sweet whey price, the price premium achieved for demineralised whey powder – over sweet whey – remains considerable. Hence we continue to forecast an additional about £6M earnings before interest and tax contribution from the £45M investment in FY2017.”
Dairy Crest’s ceo Mark Allen said the firm was now a branded and added-value business well placed to achieve profitable and sustainable growth.
“The strength of our brands is demonstrated by their performance in a challenging, deflationary consumer environment,” he said.
“We are also entering an exciting new chapter for Dairy Crest. Our functional ingredients business will be a key part of Dairy Crest in the future, giving us access to new growth markets.
“The outlook for the full year remains in line with our expectations.”
Sales, moves and investments
It was a busy end to the calendar year for Dairy Crest, as it bought out the remaining 50% share of Promovita Ingredients on December 18 2015 and completed its £80M sale of its dairies operations to Müller UK & Ireland Group on Boxing Day.
It now expects net proceeds before working capital adjustments to be around the lower end of £40–50M.
Also in December, Dairy Crest moved its innovation team into an innovation centre on the Harper Adams University campus in Shropshire.