Express Dairies looks for lift from post

Express Dairies, one of Britain's struggling milk companies, yesterday issued an upbeat outlook for the months ahead, which are set to be boosted by a new deal to deliver parcels along with the morning milk.

Express's shares rose 2.25p to 28.75p as the company said trading looked "encouraging" and it recorded a smaller than expected loss for the year to 31 March. It lost £10m before tax, down from a £15.6m pre-tax profit last year.

The group has been hit by nearly £31m of one-off costs from plant disposals and closures, which were done in response to falling demand. It has cut 1,650 staff in the past year.

As well as reducing expenditure in its milk supply business to supermarkets, Express is trying to find ways to halt the decline of its home delivery business. One is to deliver parcels and it has been granted a preliminary licence by the postal regulator Postcomm.

The company hopes to have a full licence and to roll the service out in two to three months. Its target is to deliver 4.5 million parcels a year.

Express's home delivery business accounts for 20 per cent of its revenue, which last year suffered an 11 per cent decline. The company has also been struggling because its other division, supplying milk and cream to supermarkets, is operating in a market where there is more supply than demand.

Express's shares held up despite the company announcing that takeover talks – thought to be with Arla Foods, the Danish maker of Lurpak butter, since February – had collapsed.

The company is expected to sell off more dairies this year and has signalled its interest in possible deals. Express has been involved in a price way in the last year with rivals, especially Robert Wiseman, the operator which is dominant in Scotland. Companies have been slashing prices to try to grab business from supermarkets.

The Office of Fair Trading investigated whether Wiseman's strategy amounted to abuse of its position as market leader in Scotland to price competitors out of the market but has not acted against the company.

Sir David Naish, chairman of Express, said the business had dealt with many problems in the last 12 months. "Trading this year is encouraging, with sales volumes running ahead of budget," he said.