He made his comments at the company’s annual general meeting.
“We continue to make good progress with our strategy to grow added value sales and reduce costs and borrowings,” he said. “Our strategy of investing in our five key brands (Cathedral City, Country Life, Clover, Frijj and St Hubert Omega 3) continues to deliver growth. Total sales of these brands have increased by 3% compared to the same period last year. This builds on the excellent growth that these brands have achieved over the last three years.
“We have also continued to make good progress with sales of liquid milk to our major retail customers. In particular, sales of milk in bags using our innovative, patented jug, Jugit, are growing strongly. In addition to national distribution with Sainsbury’s, we have recently started a trial with Tesco and are increasing sales to our doorstep customers. Our doorstep delivery internet proposition, milk&more, continues to develop well.
“We’re implementing our plans to drive costs down across the business. The recently announced investment in our liquid milk dairies is on track to improve efficiencies and provide additional capacity. The project to simplify and centralise the administration in our household depot network is moving forward and we have identified further efficiency savings in our UK spreads business. Overall, we expect to make annual savings in line with last year.
“We have maintained good progress on managing our cash flow into the first quarter of 2010/11 and we expect this to deliver a meaningful reduction in our year-end debt. As previously announced, we have reduced our stake in Wexford Creamery Limited to 30%. The cash proceeds from this transaction of €9m have been used to repay debt.”
Mark Allen, chief executive, added: “Dairy Crest continues to benefit from being a broadly based business. At the start of the year, we set out our objective to increase profits, generate cash and further reduce our borrowings, and our performance in the first quarter is in line with our expectations. We remain well placed to deliver over the rest of the year.”
The group expects to issue its half-year trading update on 30 September 2010 and its interim results for the six months ending 30 September 2010 on 11 November 2010.
Source: Dairy Crest
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