Dairy Crest has taken a big step in easing its debt position by selling its 49% stake in yogurt group Yoplait Dairy Crest for £63.5m.
Following the sale, the dairy products group now expects its net debt at year end to be about £435m. Dairy Crest, whose brands include Country Life butter and Cathedral City cheese, said the sale was also consistent with its policy of focusing on core brands.
Trading remains in line with previous statements, the group said. The retail environment remains tough, Dairy Crest said, adding that it has been using promotions to grow volume.
Sales of Country Life butter, which has been helped by an advertising campaign featuring John Lydon (formerly Johnny Rotten of the band the Sex Pistols), and Clover are up by 25% to 30%, it said.
Cathedral City sales have increased approximately 10% by volume and 20% by value over the year, Dairy Crest said.
Speaking at a presentation for analysts, chief executive Mark Allen said Dairy Crest had not been adversely affected by a move to own label products as recession-hit consumers seek value. Volumes are down 4% in own label dairy products, but Dairy Crest has been lifting volumes, he said.
He added that the company had not had to use promotions more than anticipated, with 68% of goods sold at full price. The firm is coping with a decline in milk production in the UK by reducing the amount used as an ingredient in its products, he said, adding that it will reduce the total amount used by about 50m litres this year.