Dairy Crest has said it remained committed to trimming its pension deficit and financing further investment in promotions following the cut in its share dividend.

Future pressure on profits and sales following disposals, combined with a decision to renew pension deficit contributions at the rate of £20m ($31m) a year, had prompted Dairy Crest to reduce future dividend payment targets by a quarter, the company said.

A final proposed dividend of 13p a share is 18% lower than the 20.1p for the year to March 31. The cut followed an increase by rival Robert Wiseman.

In Dairy Crest’s preliminary results for the year to 31 March, dairy business operating profits fell £7.9m as bulk cream prices fell and the company struggled to pass on lower prices to its farm suppliers.

The company said it was determined to preserve financial firepower to promote brands including Cathedral City, Frijj, Clover and Country Life.

Dairy Crest chief executive Mark Allen said: "Dairy Crest has… delivered good growth in brands, achieved a material reduction in net debt, reduced costs and improved our operating efficiencies.

“However… the board has concluded that it is sensible to conserve cash and ensure that the business is well funded to protect investment in its brands and into efficiency-driven capital projects. Accordingly, it has decided to rebase this and future dividends by 25%.”