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 British tourists 'murdered' in Thailand: Pair's bloodied bodies found naked on Koh Tao beach
- 2 Vivienne Westwood says 'Yes' to Scottish Independence by declaring: 'I hate England'
- 3 Welcome to Cameroon, where drinking Baileys can lead to imprisonment
- 4 Lego breaks out of the toy box and heads for the gallery
- 5 Vogue under fire for 'Big Booty' article
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...