Dairy Crest feels the squeeze over cream prices
Cheese and butter maker Dairy Crest said it remains on track to boost half-year profits despite feeling the squeeze from rising cream costs.
The firm, which has its major innovation centre at Harper Adams University near Newport, said Cathedral City would churn out double-digit volume growth for the six months ending in September, thanks to a strong customer appetite for the "UK's leading cheese brand".
However, sales of butter brand Country Life took a hit after the firm rolled back promotional activity in response to the soaring cost of cream.
Dairy Crest, which also owns Clover and Frylight, said half-year profits looked set to beat last year and expectations for the full year remained the same.
Chief executive Mark Allen said: "Cathedral City has had a strong first half of the year, delivering good volume and value growth and strengthening its position as the nation's favourite cheese.
"This performance has more than offset the impact of further input cost inflation in the butter business.
"Overall, first-half profits are expected to be ahead of last year.
"Our profit expectations for the full year are unchanged despite input costs remaining high.
"The strength of our brands and focus on quality, innovation and efficiencies mean that we remain well positioned to deal with market conditions."
The dairy giant said half-year volumes for Cathedral City, Clover, Country Life and Frylight would all come in higher than 2016.
It added that net debt was expected to fall at year end.
On the pension scheme, the company said the fund would see an exceptional gain of around £125 million for 2017/18 after changing the indexation from RPI to CPI.
Mr Allen added: "We continue to focus on cash generation and on reducing net debt in the full year.
"The agreement reached with the Trustee of the Pension Fund is an important development and significantly reduces future funding liabilities."
