Advance for Dairy Crest as float nears

DAIRY CREST, the milk distribution arm of the Milk Marketing Board planning to float early next year, yesterday announced a 14 per cent increase in pre-tax profits for the 12 months to 31 March, up from pounds 24.6m to pounds 28.2m.

Part of the MMB co-operative formed 60 years ago to buy milk from farmers, Dairy Crest is expected to come to the stock market in the first half of 1994 with a value of about pounds 250m. Legislation now going through Parliament will abolish the MMB's monopoly over milk supply.

Geoffrey John, chairman, said up to 70 per cent of shares in the newly floated company could stay in farmers' hands.

Dairy Crest has been restructuring itself in preparation for life as an independent, commercial company. It spent a further pounds 27m on factory closures and redundancy payments in 1992, on top of pounds 20m in 1991.

In the past three years Dairy Crest has cut its workforce by one-third to 8,600.

John Houliston, chief executive, said: 'The management team is under no illusion about the challenge that awaits us in the new world environment.'

Figures for 1992 were also depressed by a high tax charge. Dairy Crest paid 45 per cent tax last year compared with 31 per cent in 1991.

David Lewis, finance director, said the rise was because tax allowances on capital investment projects had fallen unkindly between tax years. He expected the tax charge to be 33 per cent in future years.

The Milk Marketing Board also published financial results yesterday. Its 'operating surplus' was pounds 2.3m, up from pounds 2.2m.