Express Dairies improves in 'challenging' market
the UK company to a slight improvement in underlying pre-tax
profits in the first half. But the situation remains challenging,
and it could be some time before the company shows an improvement
in real terms.
A programme of restructuring and disposals has helped the UK's Express Dairies group improve its underlying pre-tax profits in the first half of the year, but the company said that market conditions remained challenging.
Underlying pre-tax profit reached £14.0 million (€21.8m) for the first six months of the year, just ahead of the £13.4 million registered in 2001, and the company said it had managed to reduce its debts and maintain its market share during the period. Operating profit from continuing businesses was also just ahead of the previous year at £19.1 million (2001: £18.7 million).
That the market place is still difficult is reflected in the fact that group turnover from continuing operations dropped from £400.8 million to £346.6 million during the half.
Chairman Sir David Naish said that there was much to be positive about in the first half, including an important strategic alliance with a major milk co-operative, Milk Link, and the gaining of a licence from Postcomm which "creates new opportunities for our home delivery business".
He said that the company was on track to achieve targeted cost savings of some £9 million in the current year, through measures including the development of a shared service centre for all its accounting and administration functions, as well as reductions in head office staff numbers and the continued rationalisation of the home delivery depot network.
Express completed its restructuring programme in July with the sale of its UHT and Frome creamery businesses and the formation of the strategic alliance with Milk Link. Over the last 18 months, the group has sold off non-core businesses in Northern Ireland and central Scotland, its liquid milk business in County Durham, and its ingredients and UHT operations, as well as reducing its English bottling dairies from five to two, closing the smallest of its supermarket dairies, and progressively rationalising the home delivery depot network and administration.
"We have maintained our market share in the supply of milk to supermarkets, though returns in this sector continue to reflect industry overcapacity, which will ultimately be addressed only through consolidation and rationalisation," Sir David said. "In the home delivery sector, we have further reduced costs while developing our plans to maximise the potential of our network following the issue of our Postcomm licence, which permits us to deliver up to 4.6 millionitems through our urban delivery network over the next 12 months."
Commenting on the future prospects of the company, Sir David said: "The actions we have taken to restructure the business, and to concentrate on our core skills in supplying fresh milk and cream to retailers and home delivery, have undoubtedly strengthened our position within what remains a very challenging market place. I believe that we have the right team and the right strategy to maintain the progress we have achieved in the first half of this year."
