Britain's Dairy Crest Group reported a 39 per cent increase in half-year profits on Wednesday and its shares moved higher after the nation's biggest dairy firm gave an upbeat outlook.
The company, which markets brands such as Clover spreads, Cathedral City cheddar cheese, Frijj flavoured milk and Yoplait yoghurts and desserts, said it was confident of hitting a forecast made by its house broker of 20 per cent annual earnings growth.
The group, which bought Unigate's milk and cheese business in July 2000, reported pre-tax profits of 55.1 million euros (£33.8 million) for the six months to September 30, within the range of analysts' predictions of 53.9 million euros to 55.5 million euros (£33 million to £34 million). Earnings per share rose 34 per cent to 20.6 pence.
Chief Executive John Houliston said he was comfortable with house broker ABN Amro's forecast of 20 per cent annual earnings growth for the three years to March 2003, and was on target at the halfway stage.
"Although these are competitive and challenging times, we are confident we can deliver an attractive financial performance to enhance shareholder returns," Houliston said.
The shares rose four pence to 374p by 0920 GMT and have performed strongly since hitting a low of 130p in March 2000, outperforming the FTSE All-Share index by 250 percent and UK food stocks by 130 percent over the last 20 months.
Its consumer food business profits rose 76 per cent, with 20 per cent volume rises seen from Cathedral City, Frijj and Yoplait and 10-percent growth from Clover, as it gained from a swing to mature flavoursome cheeses away from mild commodity products.
Houliston said profits from liquid milk were "significantly ahead", helped by the 250 million pound acquisition of Unigate's business, but he admitted that there was a need for further rationalisation in an industry beset with over-capacity.
He said that Unigate deal and the creation of Britain's two largest most efficient dairies would go some way to addressing that problem.< br>
Dairy Crest buys a quarter of Britain's milk from farms, and is number two in the liquid milk market sold through retailers, with a share of 27 percent after Express Dairies Plc's leading 30 per cent share.