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Higher milk and cheese prices in the UK fuels worries over rising net debt for Dairy Crest

Published: 21:07 09 Feb 2017 AEDT

Milk containers
In mid morning trading, Dairy Crest shares were down over 4.4%, or 25.5p at 591.0p

Worries over rising net debt due to higher milk and cheese prices dragged shares in Dairy Crest Group PLC (LON:DCG) lower today, although the FTSE 250-listed firm maintained its outlook for the full-year.

The maker of Utterly Butterly and Clover spreads and Cathedral City Cheddar cheese said it has seen further milk cost inflation since the half year; it has increased the price paid to farmers by 38% since June 2016 to 8.28p per litre.

Britain's largest dairy company added that market prices for cream, which determines the input costs for its butter business, have remained high after more than doubling in the first half of the year.

Dairy Crest said that "these movements inevitably result in a short-term working capital outflow and, as a result, we now expect year end net debt to be somewhat higher than 31 March 2016.”

In mid morning trading, Dairy Crest shares were down over 4.4%, or 25.5p at 591.0p.

However, the group said that for the nine months to December 31, its Clover, Frylight and Country Life brands all saw volumes grow,  while Cathedral City improved in the third quarter.

It added that overall their combined volumes are in line with the same period last year.

Chief executive Mark Allen said: "The business has continued to make progress during the quarter. Our brands have performed well supported by successful innovation and brand investment. I'm particularly pleased to see the improvement in Cathedral City's performance.”

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