Dairy Crest is issuing the following pre-close trading update for the six months ending 30 September 2011 ahead of announcing its Interim Results on 10 November 2011.

Dairy Crest's trading in the first half of the year has been in line with our expectations.  Operational efficiencies and selling price increases have broadly offset higher input costs.  Higher property profits will result in overall profits for the first half being slightly ahead of the same period last year. 

We have continued with our successful strategy to build added value sales and make efficiency improvements across the business.  Despite the pressure on consumers' disposable incomes, sales of our five key brands (Cathedral City, Country Life, Clover, St Hubert Omega 3 and Frijj) in total have continued to increase, although volumes of these brands will be lower than in the same period last year.

Innovation remains an important part of our strategy and we have completed the development of four exciting new products during the period.   In the UK we have launched 'Chedds', a range of three new children's cheese snacks and 'The Incredible', three new premium flavours for our branded milk shake Frijj.  In France we have launched a new St Hubert non-dairy cream and are about to launch a new spread that contains seeds.

In our Dairies business we have continued to grow our milk sales to the major retailers and have maintained milk&more sales at over £1million / week.  However, as we identified earlier in the year, strong competition in retail milk markets has led to lower residential milk sales.

We have agreed to increase the price we pay our farmers who supply our Dairies business by 1.85 pence per litre from 1 October 2011, reflecting their higher costs.  These include new bonuses for enhanced milk quality to further encourage the focus on milk quality and animal welfare.  We are in the process of negotiating selling price increases to offset the impact of this.

Net borrowings at 30 September 2011 will be higher than a year ago as anticipated, reflecting higher cheese stocks, increased capital investment and our previously announced purchase of M H Foods.

Mark Allen, Chief Executive, commented: 'We are pleased that we continue to perform as expected in this tough environment. In the first half our broad base, high quality brands and ongoing cost saving measures have allowed us to balance the conflicting demands of increased input costs and subdued consumer spending. At the same time we are investing for the future, with new products and upgraded facilities.  Overall we remain confident of delivering full year profits in line with our expectations.' 

Dairy Crest is hosting a site visit at its Davidstow creamery on the afternoon of Monday 19 and Tuesday, 20 September, as part of its investor relations programme. 

The management team will make presentations on the UK Dairy Sector, Dairy Crest's Cheese Business and Innovation. These will be made available on Dairy Crest's website at www.dairycrest.co.uk/investors.  No material new information will be disclosed in these presentations.

For further information, please contact:

Dairy Crest Group plc
Arthur Reeves	01372 472236
Brunswick
Simon Sporborg	020 7404 5959
Nina Coad