"The performance of the cheese business was below expectations primarily as a result of reduced sales volumes. Despite challenging market conditions in the first half, we achieved firmer cheese realisations in the second half" Dairy Crest said.
The company said that action had been taken to solve the problem but like many European dairy companies it is likely that the review of the CAP will mean that it will face more competition in the cheese sector.
The review of the CAP has meant that the EU has lowered the intervention level on exports. This has increased competition in the sector, and other companies such as Glanbia and Friesland Coberco have already hinted at the likely adverse effects, with cheese sales in particular affected byt he rising competition.
The company said that its liquid business performed well this year particularly its flavoured milk drink, Frijj, which has increased volumes and market share.
In terms of spreads, the company's two leading brands Clover and Utterly Butterly consolidated their market leading position with good combined volume growth, the company claimed.
"The year just ending ha been satisfactory for Dairy Crest with good progress in key areas. We believe that with strong brands and a well invested manufacturing base Dairy Crest is well placed to face the challenges of the future," said the company's chief executive Drummond Hall.