Dairy Crest Share Discussion Threads

[aleman] 02/2/2009 01:08

Why would they have a rights issue when they've just refinanced some Euro debt into sterling? The issuers of the new sterling debt would have insisted upon a rights issue if there had been any reason to doubt loan serviceability or covenant limits.

[muffinhead] 01/2/2009 12:15

No info on a specific date. DCG website of no help. I tend to assume the market knows well before me and prefer to look at chart for clues.

This chart is NOT a prediction. It is a cautionary note for myself. It is a place we can go, but not one where we must go. Pennants tend to be continuation patterns. Previous market low was I think 136p which is a fair target but may go lower if there is a RI



free stock charts from www.advfn.com

[muffinhead] 30/1/2009 17:16

twice the normal daily volume today and down 5.5%

i suspect the trading statement was informally leaked today may be released to the market next week ;)

[wendsworth] 26/1/2009 14:26

aleman : good rise today.

[aleman] 26/1/2009 10:41

That's the minor downtrend gone. Looks to be forming a good solid base now.

[matthewa] 25/1/2009 10:18

Any new on when the DCG t/s is going to be? DJ have in next tuesday.

[aleman] 21/1/2009 15:28

Looking better now. Higher low in, back above 200p and rising to test a minor downtrend.

[aleman] 21/1/2009 11:50

Consolidation is good. Weak holders being taken out by new buyers. It creates a base to move upwards.

[wendsworth] 21/1/2009 10:23

Very quiet BB!

Share price holding the 190 to 200p range at the moment.

Are we due a trading statement?

[aleman] 14/1/2009 22:53

Operational cashflow/debt interest will go from £108m/£23m to maybe £100m/£38m. Residual cash goes from £85m to £62m. Last time capex took £35m and cash in the bank increased £14m after the £30m dividend and a few bits. We are told this time capex will fall and they'll concentrate on paying down debt. £62m less say £20m capex and £30m dividend leaves £12m to add to last years £39m cash. They can probably pay debt down by £20-25m after the dividend and still leave £25-30m float to cover the cash-weaker H1 2009 to follow. I don't think it will be a problem to pay the dividend if debt falls from £500m to £475-480m (now futher exchange rate loss risk has been reduced). Cutting the dividend to get it down further to £445-450m seems overkill. Cashflow might also be aided if working capital stops increasing as sales growth slows so there could easily be another £10m or so off debt. It is quite possible it could hit £465-470m while still paying the dividend. In practice, ongoing reorganisations will add a few more "bits" to pay for and I think they'll let cash build up a bit which will provide fexibility and keep banks happier than lower debt and no cashin the face of further rerganisation that can cause hiccups. The fact that the update on debt and pensions forecast £500m debt at the end of March suggests they plan to pay the dividend. It would be much lower otherwise.

Even Citi admit all the debt rise was due to exchange rates in a year of higher capex and that threat has been removed. Despite that £30m increase in long debt, Net Debt only increased £15m. A repeat performance without exchange issues would have seen Net Debt fall 15m. Would there be any question marks now if this had been done a year ago?

I would also point out that some debt has been switched from Euro to Sterling and if there was a risk to the new Sterling loans, the banks would have asked for a dividend cut and it would already have been announced. They were obviously happy. I submit it will take a further deterioration in trading to get the dividend cut but the debt and dividend will be fine failing that.

(Note also that the market pushed NFDS to a 12% yield recently and got it wrong. They have since risen 50% to yield 8% after a perfectly decent trading update. As PFD have also risen a bit recently does that mean Citi's peer multiples to get a 190p target are out of date?)

[jezza123] 14/1/2009 20:49

Aleman -

Agree this is a well run company, which is unlikely to see much fall in earnings but the major problem relates to the debt which is adversely affected by the Euro/£ exchange rate - we all know how debt can kill off a company, and that's your risk here. Personally, I don't think it will happen - but my guess would be the obvious thing for management to do in order to prevent it happening (and raise cash) would be to cut dividend. So any others who want to follow Aleman be
aware - have seen too many investors chasing yield (LLOY, DSG, TATE etc etc)
get absolutely caned last year - so be warned (I'm not short on this company, but have my eye on it vis a vis the debt story) - if a divi looks too good to be true in this market, sadly it usually is.


This is from Citigroup -
US banking group Citigroup reckons Dairy Crest's total debt increased by about £30m as a result of unfavourable exchange rate movements before the dairy foods group announced plans on Wednesday to limit its net debt exposure to currency movements.

Citi estimates that the net debt/EBITDA multiple at the 2009 year-end will be 3.26, which still gives Dairy Crest some headroom against its covenant of a multiple of 3.5.

"Covenants would only be breached if our H209E EBITDA were to fall by another £11m (13%) and/or if sterling was to weaken (significantly) further against the euro," Citi analyst Eamonn Ferry said.

Nevertheless, Citi has cut its target price from the stock from 330p to 190p "to reflect our lower earnings estimates and a de-rating to peer multiples."

[aleman] 14/1/2009 18:02

Word is that authorities in the US don't want the Dow below 8000 as it renders a number of insurers bankrupt. The Fed wants to inject money to get things going so the stockmarket is as good as anywhere if they are buying up assets. This would seem to set UK resistance at around 4000 with its strong US links. Failing that, the long term support trend puts very strong support around 3700-3750 anyway. (This was tested twice in October and November and bounced strongly.) In the unlikely event this failed then 3000 looks the next stop.

I bought DCG today , by the way. I think reducing capex will mean the dividend can be maintained despite a modest reduction in profit so a 12%+ yield looks very attractive in the face of collapsing savings rates.

[wendsworth] 14/1/2009 15:58

DOW down almost 300 points in one and half hour's trading today. Tells you all you need to know!

[muffinhead] 14/1/2009 13:44

it looks like everyone has taken down the xmas lights

[wendsworth] 13/1/2009 12:45

vincenta2 : Sensible approach.

Still think the general market will drag DCG down below 200p in the short term.

[vincenta2] 11/1/2009 11:53

Quite simply, this is a quality company with quality products that are better than their competitors. I bought at 209p purely and simply to add to my portfolio because it was rediculously cheap! I'm not expecting a super rise to fame from this one; but, a target of around 285p this year on a bargain hunting/recovery bull run and perhaps 340p in 2010 would be sensible for me; then I'll see what the company is planning to do from then on. Very Very happy with my purchase.

[davebowler] 08/1/2009 16:35

Have you guys looked at the action in UNIQ?

[arab3] 07/1/2009 16:13

how much was the divi ? tia

[cockneyrebel] 07/1/2009 14:22

thanks for there replies - nice ex-divi dip to be had here now for those who prefer CGT to income I'd say.

looking for a sharp bounce over the next few days.

Directors were not buying to be heroes imo.

CR

[muffinhead] 01/1/2009 19:10

CR you may be right and all the bad news has been baked into the cake. 2008 has been a bloody difficult year. There comes a time when the tide has to turn.

Volume over the last 2 weeks is very low here. Things will get back to "normal" next week


...be lucky in 2009