Dairy Crest Group PLC Trading Statement (9203Q)
September 18 2017 - 1:00AM
UK Regulatory
TIDMDCG
RNS Number : 9203Q
Dairy Crest Group PLC
18 September 2017
18 September 2017
Dairy Crest Group plc ("Dairy Crest")
TRADING UPDATE FOR THE SIX MONTHS ENDING 30 SEPTEMBER 2017
Dairy Crest is issuing the following pre-close trading update
for the six months ending
30 September 2017, ahead of announcing its Interim Results on 9
November 2017.
Trading update
In the first half of the financial year we expect that combined
volumes of our four key brands - Cathedral City, Clover, Country
Life and Frylight - will be ahead of last year. Combined value
growth of these brands is expected to be higher than volume growth.
Cathedral City, the UK's leading cheese brand, is expected to
deliver double-digit volume growth in the first half.
Cathedral City, Clover and Frylight continue to show strong
volume growth. As previously stated, as a result of higher cream
prices, which determine input costs for the butter business, we
have reduced promotional activity on Country Life. Whilst this has
impacted sales volumes, it has partly mitigated the adverse impact
on margins.
In conjunction with our partner, Fonterra, we continue to make
good progress developing the customer base for our demineralised
whey and galacto-oligosaccharide. We will start to benefit from
this in the second half of the year.
Pension fund
As previously announced on 8 September, the 2016 actuarial
valuation for the Dairy Crest Group Pension Fund (the "Pension
Fund") is now agreed and incorporates a change in indexation from
RPI to CPI. This change in indexation will result in an exceptional
gain in 2017/18 estimated to be approximately GBP125 million.
The actuarial deficit of GBP100 million at March 2016 represents
a reduction of GBP45 million compared to the March 2013 valuation,
despite significantly lower gilt yields. Furthermore, deficit
reduction contributions will be GBP10 million and GBP15 million in
2017/18 and 2018/19 respectively; a reduction of GBP12 million
across these two years compared to the 2013 contributions schedule.
They will revert to GBP20 million in 2019/20 although March 2019 is
the date of the next full actuarial valuation and schedule of
contributions.
Profit and financial position
We expect profit for the half year to be ahead of the same
period last year. Our expectations for the full year remain
unchanged.
As normal, we anticipate that Dairy Crest's net debt at the half
year will be higher than at the year-end in March 2017 as the first
half is characterised by increased stock levels due to the
seasonality of milk supply and the payment of the final dividend.
However, we remain on track to deliver a reduction in net debt for
the full year.
Mark Allen, Chief Executive, commented:
"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.
"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."
ENDS
Dairy Crest is hosting a site visit for analysts and investors
to its National Distribution Centre in Nuneaton on Monday 18 and
Tuesday 19 September 2017. The management team will make
presentations on this trading update, key brands, innovation and
our supply chain. These will be made available on Dairy Crest's
website at www.dairycrest.co.uk/investors. No material new
information will be disclosed in these presentations.
Dairy Crest expects to issue its Interim Results for the six
months ending 30 September 2017 on 9 November 2017.
For further information:
Investors/Analysts
Tom Atherton Group Finance Director, Dairy Crest 01372 472264
Media
Tim Danaher / Oliver Hughes Brunswick 020 7404 5959
This information is provided by RNS
The company news service from the London Stock Exchange
END
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