Lower raw milk prices lifted dairy profits at the Unigate group in the halfyear to September 30th providing further confirmation of improving financial trends in Britain's dairy industry indicated by Dairy Crest in its interim statement two weeks ago. The improving trend is expected to be reflected in today's financial results of the Northern Foods group and tomorrow's results from Robert Wiseman, Scotland's premier dairy business.
Overall, Unigate's profits before exceptional items and tax increased 9.6 per cent to £66.4 million on turnover up 3.1 per cent at £1.17 billion. Earnings per share improved 10 per cent to 20.9p and the interim dividend is 7.1 percent higher at 7.5p. Dairy profits rose £1.9 million to £19.5 million on sales marginally up at £312 million. Directors say the better results benefitted from both lower raw milk costs and more stable prices for butter and powder products." Liquid milk sales were 3.8 per cent lower, a significant improvement on the 7.0 per cent decline suffered in the same period last year. Although doorstep deliveries were 8.1 per cent lower, the rate of decline was less than the 10.9 per cent reduction last year. Sales to the catering and small shops sector were broadly unchanged while sales to supermarkets continued to increase, growing by 3.5 per cent. Sales volumes of butter and powder were up 4.7 per cent. But profitability was at a similar level to last year as the strength of sterling led to falling realisations which offset the benefit of lower milk costs. "The two pence per litre fall in milk costs in the first half of the year together with a similar reduction from October 1st has created a more favourable environment for dairy activities," say directors.
Profits on fresh foods rose £5 million to £31.5 million, due to increased sales and lower costs. Yogurt sales were "particularly strong" with volumes up as much as 25 per cent reflecting the successful re-launch of the Shape range and increased marketing support. Cheese sales fell 10 per cent. Increased mature cheese sales were more than offset by lower mild cheddar sales.
Even so, cheese profits were higher due to the heavier weighting of better margin mature cheese now comprising 60 per cent of sales. Despite lower cheese sales, production levels have not been changed so that larger quantities can be held in stock to support the greater focus on mature cheese. Malton Foods, the group's pigmeat processing division, performed "well" with sales of cooked meat sales by "particularly strong."
Sales were broadly unchanged at £334 million as increased sales volumes offset the fall in pigmeat costs from last year's high levels. Investment is continuing in additional capacity and further efficiencies. Nearly £11.5 million is being invested in the Ballymoney processing plant to upgrade its machinery and develop products for the export market. Funding support in the form of £3 million grant aid is being provided by the Northern Ireland Industrial Development Board.
