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Feb 9 (Reuters) - Dairy Crest Group Plc, Britain’s largest dairy food company, said it expected year-end net debt to be “somewhat” higher than the previous year as rising milk and cheese prices in the UK put pressure on the group.
The company’s stock fell as much as 3.1 percent to 597 pence in early trading, making it one of the worst performers on FTSE mid-cap index.
Overall sales volumes across its key brands, such as Cathedral City, Country Life, Clover and Frylight for the nine months to Dec. 31 were in line with the same period last year, the maker of butters, spreads and cheese said on Thursday.
“We have seen further milk cost inflation since the half year and have now announced increases in the price paid to farmers of 8.28 pence per litre since June 2016”, Dairy Crest said.
UK’s average farmgate milk price jumped 9.7 percent year-on-year to 26.21 pence per litre in December, according to data from the Department for Environment, Food and Rural Affairs.
Dairy Crest warned that market prices for cream too have remained high after more than doubling in the first half of the year.
Cream prices determine input costs for its butter business, which accounted for more than 36 percent of the company’s revenue for the year ended March 31, 2016.
The company’s net debt stood at 229 million pounds ($286.4 million) as of March 31, 2016.
In November, Dairy Crest had warned input costs related to cheese would impact the volumes and profitability of its butter business.
However, the company reaffirmed on Thursday its outlook for the full year ending March 31.
$1 = 0.7995 pounds Reporting by Rahul B in Bengaluru; Editing by Gopakumar Warrier and Amrutha Gayathri