Dairy Crest’s dairies business has again acted as a drag on the group in its third quarter as it continued to make losses. However, the Cathedral City cheese maker said it expected the troubled division to perform better in the second half than in the first six months of the year. Dairy Crest has been hit hard by the volatility in the industry with milk costs falling but higher production and lower selling prices affecting profits, which, as it reported in November, fell 95% to £900,000 in the six months to September.
The group is desperate for the £80m sale of its dairies operation to Müller Wiseman to be given the regulatory go ahead in the hope it will act as a stabilising influence on the business and the wider sector. In this morning’s trading update, the group said it has asked, along with Müller, for the transaction to be referred back to the UK for review by the Competition and Markets Authority. It is currently engaged in “constructive talks” with the European Commission and the CMA on this application with a view to hurrying the merger process along.
“Against the background that we operate in, Dairy Crest has delivered a solid performance,” CEO Mark Allen said.
In the nine months ended 31 December 2014, Dairy Crest added its cheese and spreads performed robustly. Cathedral City continued to grow its market share and FRijj also put in a strong performance but growth was offset by lower Clover and Country Life sales leaving revenue for the period flat. The division will be the heart of the group if the sale of the dairies business completes.
Morning update
McBride reported a 4% dip in first half revenue to £364.7m as strong growth in Germany was offset by a weaker performance in Italy and Spain and subdued sales in the UK and France. However, pre-tax profit was up to £7.3m in the six months to 31 December 2014, compared with £3.7m in the same period a year ago. Chairman Ian Napier said the plan to deliver improved UK profitability was on track. The group’s shares rocketed by almost 7% to 93p on the back on the results.
Ocado (OCDO) shares are the big fallers so far this morning, down 4.1% to 413.7p, joined by Coke bottler Coca Cola HBC (down 2.5% to 1,073p) and Thorntons (down 2% to 82.1p). Sainsbury’s (SBRY), Morrisons (MRW) and Tesco (TSCO) have also dropped about 1% each in the early going.
Yesterday in the City
All the listed grocers had a wretched day with share prices down across the board after making decent head way earlier in the week.
Morrisons (MRW) led the way – and was in the top five FTSE 100 fallers for the day – with its shares down 2.6% to 181p. Sainsbury’s (SBRY) came in at 2.2% below the opening price at 266.7p and Tesco (TSCO) suffered a 1.1% fall to 229.6p.
The falls came after the BRC-Nielsen Shop Price Index showed that food prices fell by the highest rate ever recorded in January as the New Year price war took hold.
Online retailer Ocado (OCDO) also registered a 0.9% decline in its stock to 431.3p after shooting up 4.7% on Tuesday on the back of posting rising sales and a maiden annual profit.
Other fallers included SABMiller (down 1.3% to 3,527p) and Conviviality Retail (CVR) (down 1.6% to 129.9p) despite the Bargain Booze owner revealing it was back on the acquisition trail with the £6m deal to buy convenience chain GT News.
At the opposite end, Booker, Finsbury Food Group and McBride (ahead of its half-year results) all climbed, by 3.2% to 153.1p, 2.3% to 67p and 2.1% to 86p respectively.
Pharma giant GlaxoSmithKline also rose 1.8% to 1,478.5p as it reported a drop in fourth quarter sales with demand for its asthma drug remaining weak.
After closing at a four-month high on Tuesday, London’s leading shares fell back after a drop in oil prices hurt energy stocks. It finished the day 0.3% down to 6,848.7 points.
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