Sector News

Dairy Crest to shut Hanworth, Chard units, cut 260 jobs

September 22, 2014
Consumer Packaged Goods
(Reuters) – Dairy Crest Group Plc, Britain’s largest dairy food company, plans to cut about 260 jobs as it shuts two sites, citing lower demand for glass bottles and financial viability.
 
The company said it would shut its Hanworth glass bottling dairy in west London and its cream potting facility in Chard, Somerset in a phased manner.
 
Shares in the company fell as much as 5.4 percent on Monday morning on the London Stock Exchange.
 
The maker of Cathedral City cheese and Country Life butter also warned that its dairies business, which accounts for 70 percent of its revenue, would post a loss in the first half ended Sept. 30.
 
The Cardiff-based company has been focusing on improving profit by cutting distribution costs, brand improvement and selling surplus properties.
 
The Hanworth dairy, which currently employs 200 people, is expected to remain operational for about two years. The company will shut its Chard facility, which employs around 60 people, in the second half of 2015 as it was not economically viable, Dairy Crest said in a statement.
 
“The decisions … are right for the long-term future of the business,” Chief Executive Mark Allen said.
 
Dairy Crest added that it would increase production at its three plastic bottling dairies at Chadwell Heath, Foston and Severnside to meet demand from residential customers.
 
“This makes strategic sense and the closures will contribute significantly to DCG’s annual 20 million pounds cost-savings target going forward,” Jefferies analysts said in a note.
 
Dairy Crest said separately that it expected first-half profit in line with last year and that it had grown its market share for Cathedral City, UK’s biggest selling cheddar.
 
It also said its demineralised whey and galacto-oligosaccharide (GOS) projects were on track to boost profit in 2015-2016. Demineralised whey powder is a lactose-based prebiotic that is used in infant formula.
 
Shares in the company were down 3.1 percent at 396.7 pence at 1037 GMT. (Reporting by Aastha Agnihotri in Bangalore; Editing by Gopakumar Warrier)

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