Dairy Crest has revealed that it is on track to meet its profit targets despite weakness in its spreads and cheese businesses.
In a pre-close trading update for the full year ending 31 March 2010, UK-based Dairy Crest said profit before tax is due to come in ahead of last year and in line with management expectation.
But performance was mixed across the group with milk performing better than spreads and cheese.
Dairy Crest said: “The performance of our Dairies division, which has benefited from lower costs during the year, remains very strong.
“This has been partly offset by lower profits in our Spreads and Cheese divisions where, in line with our strategy to continue to grow our key brands, we have spent more on advertising and promotions during the year.”
In an effort to cut costs in the weaker spreads business, Dairy Crest is making 25 redundancies at its plant in Kirkby, Merseyside, which produces Clover and Utterly Butterly.
A total of 35 jobs are also being cut at a warehouse in Nuneaton, Warwickshire. Redundancy consultations have been completed at both sites.
Dairy Crest is beginning to see the effects of its cost reduction work on its financial position. Over the past eighteen months the company has reduced its borrowings byCommenting on the results, £140m or nearly 30 per cent. At the year-end it expects debt to be below £350m - £65m lower than at the equivalent point in 2009.
Mark Allen, chief executive of Dairy Crest, said: “Stronger brands, a lower cost base and increased focus leave us much better placed than a year ago.” But looking to the year ahead, Allen said the company still expects the trading environment to remain challenging.