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 Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
- 2 Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face the death penalty
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 Robert Mugabe eats a zoo for 'obscene' 91st birthday party
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
Boris Nemtsov shot dead: Putin critic may have been murdered by Islamic extremists, says president-led committee
British are sexually uptight, dirty and drink too much – according to Spanish book
Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face the death penalty
PornHub turns masturbation into energy in bid to save the planet
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...