Adjusted profit before tax is up 8% to £20.6m ($26.9m), while profit before tax rose sharply from £15.6m ($20.4m) to £151.4m ($198m), an 871% increase.
The company said this was from ‘continuing operations including an exceptional gain of £131.4m ($171.8m).’
It said the gain related to pensions, with a move from RPI to CPI delivering the gain.
In the UK, the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI) can be used by as the measure of inflation for pension increases. The CPI is generally lower than the RPI, saving employers money in pension costs.
Whey and GOS
Mark Allen, chief executive, said the company has delivered good profit growth despite a record high cream price, which has a temporary but significant impact on input costs in the butter and spreads business.
“We expect to accelerate sales of demineralized whey and GOS in the second half of this year. In conjunction with our partner, Fonterra, we are making good progress in developing sales channels for our products,” Allen said.
“While we expect butter input costs to continue to be challenging for the remainder of the year, we are confident in delivering our full year expectations.”
Dairy Crest’s cheese and functional ingredients products saw a profit of £22.1m ($28.9m), an increase of 91% on the same period in 2016, while butters, spreads and oils saw a profit of £3m ($3.9m), down 74%.
Dairy Crest said the Kirkby site improvement program was entering its second phase, including moving to a 24/7 schedule, and a new site agreement in place, with ‘line improvements and voluntary leavers’ scheme to significantly improve site efficiency and flexibility.’
The company added proceeds from the sale of surplus land are expected to fund the site improvement program.