Dairy Crest Group PLC Interim Management Statement (7070O)
February 11 2016 - 2:00AM
UK Regulatory
TIDMDCG
RNS Number : 7070O
Dairy Crest Group PLC
11 February 2016
11 February 2016
Dairy Crest Group plc ("Dairy Crest")
Interim Management Statement
Dairy Crest is today issuing its Interim Management Statement
for the nine months ended 31 December 2015.
Trading Performance
The outlook for the full year remains in line with our
expectations.
In a challenging market, our cheese and spreads brands have
performed well, with all four key brands increasing or maintaining
value share in the quarter. Combined sales of Cathedral City,
Country Life, Clover and Frylight over the nine month period have
remained broadly in line with the same period last year and volumes
have increased by 2%. This is a robust performance in what remains
a deflationary environment for both cheese and spreads.
In the third quarter, Cathedral City and Frylight have built on
the strong performances seen in the first half of the year. Clover
Simple, which has no artificial ingredients, launched successfully
in September 2015 and Clover volumes have since grown year on year.
Country Life sales volumes have increased markedly in the third
quarter, benefitting from promotional activity built around the
"Best of British" packaging.
Production of Infant Formula Ingredients begins
Production of demineralised whey powder and
galacto-oligosaccharide ("GOS") has commenced at our factory in
Davidstow. These are both ingredients for the growing, global
infant formula market which will give Dairy Crest access to new
growth markets and customers.
On 18 December 2015, Dairy Crest announced that it had acquired
the outstanding 50% share of Promovita Ingredients Limited
('Promovita'), the joint venture established to develop and produce
GOS. This gives Dairy Crest sole control over the development of
the GOS business and trials looking into further applications for
GOS are continuing.
Dairy Crest Innovation Centre
In December 2015, our innovation team moved into a new state of
the art Innovation Centre on the Harper Adams University campus.
This unique collaboration gives us access to leading food and
agricultural research and will enhance our innovation capability in
the future.
Sale of Dairies operations
On 26 December 2015 Dairy Crest successfully completed the Sale
of its Dairies operations to Müller UK & Ireland Group
("Müller"). This is a transformative moment for Dairy Crest and the
wider dairy sector. The UK dairy industry suffered a very difficult
2015. Milk production was high and realisations remained very low.
In this environment, losses in our Dairies division continued until
the sale on 26 December 2015.
Final proceeds are subject to certain adjustments and these are
yet to be finalised. We now expect net proceeds before working
capital adjustments to be around the lower end of our GBP40-GBP50
million guidance. Furthermore, we anticipate a negative working
capital adjustment resulting in net proceeds before costs to be
approximately GBP30 million.
Debt
Underlying cash generation in the retained business remains
strong. However, higher than anticipated pre-sale losses in
Dairies, the resultant impact on the sale proceeds and the GBP6
million acquisition of Promovita shares will impact reported levels
of net debt at the year end.
New joint corporate brokers
We are pleased to announce the appointment of Peel Hunt and
Shore Capital as the Company's two joint brokers with immediate
effect. JP Morgan Cazenove will continue to act as financial
adviser to the Company.
Mark Allen, Chief Executive of Dairy Crest, commented:
"Dairy Crest is 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.
"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."
Dairy Crest will issue its Preliminary Results for the year
ending 31 March 2016 on 19 May 2016.
For further information,
please contact:
Dairy Crest Olivia Seccombe 01372 472249
Dairy Crest Tom Atherton 01372 472264
0207 404
Brunswick Mike Smith 5959
This information is provided by RNS
The company news service from the London Stock Exchange
END
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