LONDON (Reuters) - Dairy Crest DCG.L said on Thursday that profit for the year would be in line with its expectations, with sales of its milk, cheese, yoghurt and butter brands and cost cuts in its milk business on track.
“Dairy Crest has had a strong trading performance in the first three months of the current financial year. The group’s expectations for the full year ending 31 March 2008 remain unchanged,” the maker of Cathedral City cheeses and Yoplait yoghurts said in a statement.
On average, six analysts polled by Reuters Estimates expect the company to post 2008 pretax profit of 55.9 million pounds ($113.9 million).
The firm which supplies milk to supermarkets including Sainsbury (SBRY.L), Marks and Spencer (MKS.L) and Waitrose JLP.UL, as well as to smaller shops and milkmen, said it had made good progress cutting costs after buying the Express dairies milk business last August.
“Our dairies business continues to make progress particularly in our efforts to take costs out of our operations,” it said.
The firm added that sales of a milder lower-fat version of its 130-million-pounds-a-year Cathedral city cheese brand had also been “particularly encouraging”.
In May the firm was forced to pull its Clover butter spread from the shelves, after mould was found in a batch of the tubs. The firm said that sales of the spread were now beginning to return to normal levels after the 1 million pound recall, although changes made after the problems had hit production.
“We have been implementing a range of improvement plans at the factory. Whilst these plans are progressing well the work involved is impacting current service levels.”
Dairy producers are benefiting from the rapid development of countries such as India and China, with the rising wealth amongst segments of their huge populations giving shoppers there a taste for dairy products.
“The world markets for skimmed milk powder and bulk butter are particularly strong”.
With booming demand from Asia, supply has tightened and analysts say the firm has been able to raise its prices which for many years have been whittled down by aggressive supermarkets in key markets such as Britain.