Takeover of Dairy Crest good news for farmers, say bosses

Dairy Crest has updated investors on the progress of the £80 million sale of its dairy operation to the Market Drayton-based yoghurts giant.

The Competition and Markets Authority looks set to approve the deal before its official deadline of October 19.

Chief executive Mark Allen said: "We have always believed the sale of our Dairies operations is good news for the whole UK dairy sector which is currently facing significant challenges arising from low dairy commodity returns.

"It will deliver economies of scale and cost efficiencies that will underpin investment and help the UK compete more successfully in global markets."

He added: "We still expect to complete the sale in 2015 following the CMA's indication in August that it was in favour of Müller's undertakings and are hoping for positive news in the near future.

"In the meantime we continue to do everything we can to support our farmers who are facing a particularly tough time at present."

The company is in the midst of a restructure of its operations, which has seen it close its former spreads factory at Crudgington near Telford.

However, a new food innovation centre is being built by the company at the farming-focused university at Edgmond near Newport, at a cost of £4 million.

In yesterday's statement, Dairy Crest said the development was "nearing completion". Bosses expect to have it open before the end of the year.

Dairy Crest aims to grow its sales by 10 per cent each year with product development, and the new innovation centre is designed to help it maintain that growth.

The latest updates on its Shropshire-based operations come as the company benefits from strong performances in its Cathedral City cheddar cheese and Frylight low-fat cooking oil brands.

They outperformed its butters and spreads division, which includes brands like Clover and Country Life, whose sales have fallen in "challenging" market.

The company said it expects to see its performance in its cheese and spreads divisions weighted towards the second half of the year.

Mr Allen added: "Lower cheese costs and an expected improved performance from our spreads and butters business in the second half mean that our full year expectations remain unchanged."