Dairy Crest Share Discussion Threads

[philanderer] 04/10/2012 11:58

Bought in this morning , luck to all.

Investec retains 'buy' today .. tp = 377p

[philanderer] 28/9/2012 00:04

Numis upgraded thursday from 'add' to 'buy' ...... target price up from 383p to 430p.

Just on the watchlist for me at present.

[zcaprd7] 27/9/2012 13:31

Blimey, whats going on now?

[zcaprd7] 24/9/2012 10:59

Looks ok then...

[skinny] 24/9/2012 07:24

Dairy Crest is issuing the following pre-close trading update for the six months ending 30 September 2012 ahead of announcing its Interim Results on 8 November 2012.

Trading in the first half of the year has remained challenging and our profits, having adjusted for the disposal of our French spreads business, St Hubert, will be lower than the same period last year. However, our profit expectations for the full year ending 31 March 2013 remain unchanged.

Strong momentum in Brands

Our four key UK brands (Cathedral City, Country Life, Clover and Frijj) have continued to perform strongly in the first half. Increased marketing expenditure behind these brands is supporting this growth. All four have been advertised on television in the period - the first time that has ever happened.

Innovation remains a focus in our ongoing drive for added value sales. For example, Chedds, natural cheese for children (whose annual retail sales now exceed £7 million), Frijj Incredibles and Cathedral City Selections are all performing strongly. Further innovations are planned for the second half, including a long-life variant of Frijj. This is aimed at the convenience market and provides a significant opportunity for further growth.

As part of our continued drive to grow and improve efficiency across our business, we have decided to consult with employees on plans to consolidate our spreads production into a single UK location, our existing facility at Kirkby, Merseyside. As a result of the consolidation our site in Crudgington, Shropshire, will potentially close in 2014.

Decisive action in Dairies

Our Dairies business has been facing unprecedented market conditions but we remain focused on achieving a 3% return on sales in this business in the medium term. We continue to take a number of decisive actions to achieve this, including implementing milk selling price increases, closing our Aintree creamery, consolidating milk rounds to allow the closure of 23 depots in the six months and reducing overheads. Plans are on track to close our Fenstanton dairy, as previously announced, this autumn.

We increased the price we pay our non-aligned supplier farmers for milk by 1.85 pence per litre from 1 October 2011, but a steep fall in cream prices led to a price reduction of 2 pence per litre from 1 May 2012. A second planned reduction, due to take place on 1 August 2012 was postponed while we negotiated price increases with our customers and this had a small adverse effect on profits in the period.

We have today announced higher farmgate milk prices for our suppliers. These reflect the expectations of improving returns from commodity markets and higher selling prices.

Improved financial position

Following the sale of St Hubert, our financial position is much improved. We received €430 million on 28 August 2012 which has been used in part to repay drawdowns from our revolving credit facility. The balance has been placed on short-term deposits, with the position for the longer term currently under review. Our aim in deploying cash will be to preserve the Group's capacity to make acquisitions, while providing appropriate long-term funding for the pension fund and driving towards a more efficient debt structure.

Mark Allen, Chief Executive, commented: 'We are pleased with our first half performance despite the significant pressures on our business. Although we expect these to continue into the second half our first half performance together with our plans for the second half means that our profit expectations for the full year remain unchanged. At the same time we have continued to move the business forward and the proceeds from the sale of St Hubert leave us much stronger financially.'

Dairy Crest is hosting a visit for analysts and investors at its Kirkby Spreads manufacturing facility on the afternoon of Monday 24 and Tuesday 25 September. The management team will make presentations on our Spreads and Dairies Businesses, as well as the Group's sales and marketing activities. 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.

[yam114] 13/9/2012 23:04

True, but it's a good divi with good divi cover and low p/e who can ask for more. nearly forgot chart looks ok as well. As long as it's got all 4 it's makes my list to buy. If the market falls at least the divis good while i'm waiting for things to improve again.

[zcaprd7] 11/9/2012 11:16

Bit volatile up here...

[yam114] 04/9/2012 19:18

Held up well on a bad day.

[aleman] 07/8/2012 10:26

Shore Capital BUY 03 Aug 2012
2012 77.30 42.20 20.40 1,632.10
2013 47.30 25.80 21.10 1,473.00
2014 58.00 31.60 22.10 1,435.00

[aleman] 02/8/2012 09:41

Numis Securities Ltd ADD 31 Jul 2012
2012 87.40 48.50 20.40 1,632.00
2013 68.50 37.60 21.00 1,552.00
2014 63.00 36.20 21.80 1,472.00

Peel Hunt BUY 31 Jul 2012
2012 87.39 49.33 20.20 1,632.05
2013 70.03 40.56 21.00 1,486.38
2014 63.32 37.60 21.50 1,431.26

[aleman] 05/7/2012 15:11

Panmure Gordon BUY 02 Jul 2012
2012 87.40 50.50 19.90 1,632.00
2013 83.00 47.00 19.90 1,678.00
2014 85.60 48.70 19.90 1,692.00

Numis Securities Ltd ADD 29 Jun 2012
2012 87.40 48.50 20.40 1,632.00
2013 88.00 48.00 21.00 1,583.00
2014 99.80 55.00 21.80 1,589.

[aleman] 29/6/2012 22:40

(Taking up a point in your article.)

Buybacks are bad news in my experience - not theory but experience. Surfcontrol (price tanked after trade deteriorated), United Utilities (buybacks then price fell after dividend cut), National Grid (rights issue and slight dividend reduction hit price following buybacks), Just Car Clinics (management got larger share of company, shares fell on worse trading, then tanked when they delisted). I was considering Halfords recently but the buyback there put me off as it often suggests management have run out of ideas and/or are pursuing their own interests, in my experience. They've now tanked as online eats into traditional sales, it's diversification into car servicing is being hit by margin pressure as others doing the same, and its debt has risen so they may now be set to cut the dividend to pay debt down. They look like inadvertently paying for buybacks by cutting the dividend. You will get a good argument from many investors based on bad experiences. Many of us now see buybacks as a sign of weak management or a sign of selfishly putting eps- linked directors' options and bonuses ahead of shareholder returns - or, at least, some shareholders' returns as shareholders want returns in different ways, which is part of the problem.

That's practical experience. Now the theory: if these companies had given shareholders more dividend, they would have had the opportunity to reinvest in other companies to give them more dividend income to help offset the capital losses, with the potential for an offsetting capital gain as a bonus. This can possibly debated but the principle that stands out to me is this: it should be MY decision if I want to use MY profit to buy more of the same company's shares. If I wanted to pass that decision to somebody else, I would have invested with a fund manager of some description. My track record of investing (despite the above) is actually very good and I'm now a professional investor. WHy do directors think they know better than me how to invest in shares? If they want to invest in more cheese makers or car servicing equipment, then I don't pretend to know capex better than them and will defer, but I don't see why they should think they know that their own company is the best choice of share available on the whole stockmarket. By operating buybacks, they are denying me the decision on the best place in the market to invest my money and doing it for me. The odds on it being their own company out of the thousands I can choose from are rather slim ,and might not be wanting to increase my concentration risk. If the case was actually compelling enough, I might want to buy more - but not have a large volume of buying pushing the price up. Why would I want to see the price rise of a company I was trying to buy more of? I'll get a better yield if the price falls! So, actually, the directors and I do not have the same interests when it comes to buying shares. If they want to buy shares in their own company, they should USE THEIR OWN MONEY RATHER THAN MINE.


I used to think buybacks were okay but experience has tought me differently and I almost always vote against them (and convoluted remuneration packages that encourage them). If a company's shares are good enough value, then I can still buy them myself with the extra dividend distributed. If others also think they're good enough to buy and push the price up, then I can't complain. And I like to complain. We need more shareholders to do so.

(I've already noted the Long Term Incentive Plan is very generous - up to 100% of salary for 2012 - and linked to eps, with allocations 40% related directly to eps, and 60% indirectly as total shareholder return. It is very typical of the type of packages I vote against because it does not bring directors interests into line with mine as it encourages potentailly ill-timed buybacks over dividends. )



I, too, am struggling to see why the market was so underwhelmed by the St Hubert divestment. We sell 1/3rd of profit-generation and get over 3/4 of the market cap as cash. Granted that 1/3rd was a growing bit. I agree it it will feel better when we see the cash being put to good use. I don't see buybacks as being good use.

[exv] 29/6/2012 17:00

I posted a section on DCG today:



General gist is that it's a positive for the business, but I want to see what they plan to do with the cash given the questions around the dairy segment, their substantial debt pile and management talk of potential acquisitions.

No move in share price though - looks cheap!

[aleman] 29/6/2012 11:41

Market cap £440m. Disposal proceeds £340m. Rest of the business earning 2/3rds of profits and £60m+ cashflow valued at only £100m.

[skinny] 29/6/2012 07:10

Proposed disposal of its French branded spreads business, St Hubert SAS ("St Hubert")

Overview

Dairy Crest, the UK's leading dairy foods company, today announces that it has received a binding offer from Montagu Private Equity SAS regarding the proposed disposal of the entire issued share capital of St Hubert for a consideration of €430 million (£344 million) payable in cash (the "Transaction").

[wipo1] 21/6/2012 13:19

Good value at this price - I think 370p nearer fair value.

[uxb_steve] 19/6/2012 16:42

Mazarin - thanks for the reminder - avoids the usual panic when I see the share price drop on ex-d day.

[mazarin] 15/6/2012 10:10

DCG goes Finals Ex-Div (14.7p) on 20/06/12 payable 02/08/12

[mazarin] 01/6/2012 22:00

Glad to see a stronger finish here today better than with some of my other holdings. Expect the share price to creep up ahead of Final Ex-Div yet to be announced usually around 24th June

[aleman] 29/5/2012 14:34

Quite the opposite, perhaps? There is speculation that that the Arla deal could lead to a dairy closure which will help DCG. Either way, it was said it wouldn't make that much difference to the plans to raise margin in dairy from 1% to 3-3.5% over the next 4 years through closures, capex and new more flexible milk pricing contracts.

Another recent more optimistic forecast:

Numis Securities Ltd BUY 28 May 2012
2012 87.40 48.50 20.40 1,632.10
2013 88.00 48.00 21.00 1,583.00
2014 99.80 55.00 21.80 1,588.80

[muffinhead] 26/5/2012 19:34

More competition for DCG


too much dairy capacity

[aleman] 25/5/2012 11:23

Paribas BUY 24 May 2012
2012 73.00 48.25 20.40 1,620.00
2013 61.00 47.32 20.40 1,633.00
2014 75.00 46.82 20.40 1,641.00
2015 78.00 48.78 21.01 1,650.00

[aleman] 24/5/2012 09:45

There's value here but the market doesn't like them. It just sees milk and thinks there's no money to be made. I've other priorities at the moment but might top up over the summer if they remain out of favour. I could be disappointed if the sale St Hubert comes first but there's lots of other fish in the sea at the moment to catch, I'm pleased to say.