Dairy Crest cheered analysts last week with news of a 30% rise in second-half sales to £761m and claims it had turned around its business in the difficult middle ground.
Chief executive Mark Allen said the acquisition of French spreads business St Hubert and Express Dairies in the UK had bolstered sales and strengthened the bottom line.
He also shrugged off the 35% rise in the cost of raw milk, saying Dairy Crest had managed to pass on all the rises to its customers. "The rise in milk prices has been a significant challenge, but we've achieved price increases to compensate," Allen said. "Customers are supportive and have either raised prices or agreed to raise them. There's a history of low margins in our business with the middle ground but it's now looking a lot more attractive."
Allen said he was looking at the feasibility of extending DC's pilot Milk&More doorstep delivery scheme to more of its 170 depots. It operates in five areas with an offer of goods from organic veg and detergent to bacon and orange juice. "We're taking an old asset and bringing it into the 21st century," said Allen. "Doorstep customers can make distress purchases with the click of a mouse."
The concept could be applied to independent retailers and smaller supermarkets, Allen said.
Dairy Crest also confirmed it would build new packing facilities, saying they would be installed at its Nuneaton cheese maturation plant. It will spend £25m to get the site up and running by early 2009.
Overall, adjusted pretax profit was up 21% to £37.1m. Cathedral City moved into top spot in the cheese brand rankings, worth an annualised £148m at retail level. Spreads also posted strong growth, although this was offset by business lost when Clover butter was withdrawn because of mould contamination.