Investment: Brands reward Dairy Crest
Wednesday 11 November 1998
Although this is off their spring peak, the shares have outperformed the market by around 30 per cent since flotation. The City likes the management and its strategy, and yesterday's half-year figures provided more evidence that John Houliston, the chief executive, is getting it right.
Pre-tax profits rose 11 per cent to pounds 20.7m and margins jumped from 5 to 5.8 per cent as Dairy Crest continues to shift its focus towards higher- margin, added-value ranges. These products, such as Cathedral City mature cheddar, Yoplait yoghurt and Clover spreads, now account for 40 per cent of sales and two-thirds of profits. The strategy is to edge those figures higher through organic expansion and acquisitions, such as February's pounds 66m takeover of Raine Dairy Products.
Dairy Crest is backing its top brands with increased advertising spends, which are paying dividends. The extra pounds 1m put behind Cathedral City cheddar lifted sales by 7 per cent in a market up just 2 per cent overall. Clover spread, which retails at a premium to rivals such as Utterly Butterly, benefited from a pounds 3m television campaign and its market share is growing.
On a broader front the dairy market is tough, but Dairy Crest's brands should give it some muscle against the might of the supermarkets.
The business may benefit from the inevitable consolidation of this sector but, even without a big shakeout, it looks well placed to make further progress.
On full-year forecasts of pounds 45.5m the shares trade on a forward multiple of 11. That is only in line with the sector, where a premium to the more commodity-based players such as Express Dairies and Robert Wiseman is justified. Good value.
- 1 Howard Jacobson: Let’s see the 'criticism' of Israel for what it really is
- 2 Gingers face extinction due to climate change, scientists warn
- 4 Pornhub pleads with users to stop uploading videos of Brazil 'getting f**ked by Germany' in the World Cup
Jennifer Lawrence face palms Emma Watson at Christian Dior show in Paris
Gingers face extinction due to climate change, scientists warn
Pamplona Running of the Bulls 2014: Briton critically injured in San Fermin festival
Elephant 'cries' while being rescued after 50 years of abuse in India
Google executive died on yacht after prostitute gave him fatal dose of heroin, say police
Sustained immigration has not harmed Britons' employment, say government advisers
British jihadist calls for 'flag of Islam' over Downing Street and Buckingham Palace
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
£55000 - £65000 per annum + excellent package & bonus expectations: Real Staff...
£80000 - £90000 per annum + competitive: Real Staffing: A highly successful Co...
£40000 - £50000 per annum + highly competitive package: Real Staffing: An oppo...
Highly competitive: Real Staffing: VP - Operational Compliance - Global BankA ...