Dairy Crest has increased its provision for bad debt by £4m after a customer slipped into administration.

Quadra Foods buys milk from Dairy Crest for its Dairystix brand, a long-life milk ‘stick’ for use with tea and coffee on airlines and railway services.

In a statement issued this morning, Dairy Crest said it intended to increase bad debt by “up to £4m”. However, it hoped to reduce that amount, potentially by offsetting money it owed to Quadra under a ‘milk swap’ arrangement.

“We expect to treat any charge as an exceptional item in 2011-12 and, as such, it will not impact on our dividend considerations,” the statement said.

It was an isolated incident and would have no material effect on the company’s year-end borrowings, it added.