The manufacturer said the combined sales volumes of Dairy Crest’s four key brands – Cathedral City, Clover, Country Life and Frylight – were in line with the same period last year. The outlook for the full year remained unchanged, it said.
In May, Dairy Crest reported revenue for the full-year ended March 31, 2016, was down by 5.8% to £422.3M, driven by deflation in the market.
Commenting on first-quarter trading, chief executive Mark Allen said: “The year has started off as we expected. Our branded business continues to perform well.
“In cheese, we have successfully re-launched Cathedral City, the nation’s favourite cheese, with new packaging and branding. This has been supported with a wide-reaching media and promotional campaign.
“Our butters, spreads and oils business is progressing well. Clover and Country Life have both built on the momentum from the second half of last year. Frylight sales are also growing strongly.”
Operational efficiencies
Allen said the business was also seeing the benefits of its investment in infant formula ingredients, with improved operational efficiencies at its demineralised whey and galacto-oligosaccharide (a prebiotic) production facilities.
“We are successfully building the customer base for both products in partnership with Fonterra,” he added:
The company celebrated its 20th year as a listed company and is holding its annual general meeting today (July 19).
Dairy Crest planned to issue its half-yearly trading update on September 19 2016 and its interim results for the six months ending September 30 on November 10.
Shore Capital
City analyst Shore Capital said it was “encouraged” by the first quarter trading update. But it did not plan to adjust its full-year forecasts after the statement.
Shore Capital’s Darren Shirley and Clive Black said the UK’s market leading brand Cathedral City had benefited from new packaging, branding and media support.
“We believe volumes and sales are slightly down with the period starting slowly against tough comparatives and a deliberate fall in promotional spend, though ended strongly post the relaunch and we are confident volumes will be positive through H1 [the first half],” said Shirley and Black.
Frylight sales would continue to grow at a double-digit rate and this was increasingly becoming a growth driver for the group, they added.
“Whilst we are comfortable that Dairy Crest can trade robustly in both inflationary and deflationary markets, there can be no doubt that the profit stream from both cheese and demineralised whey activities would be much better underpinned by rising dairy prices,” said Shirley and Black.
Currency trader XTB.com said it had been a challenging year for Dairy Crest shareholders, “with recent strong selling after the Brexit vote testing their resolve”.
Bu the share price had stood firm and closed on Monday (July 18) at a higher level than the day of the referendum, said its market analyst David Cheetham.