Cathedral City maker looks to expand cheese production

The cash, to be raised through a discounted share placing, will be used to ramp up cheese production from 54,000 tonnes per year to up to 77,000 tonnes on the back of soaring demand.

Dairy Crest pointed to the fast-growing UK cheese market, which is expanding at around 2 per cent per year, highlighting opportunities in snacking and convenience ranges.

It also said there is demand for “high-quality mature cheddar” in Europe, the US, China and the Far East.

The firm cited capacity constraints at its factory in Davidstow, Cornwall, for the expansion push, with the total cost to come in at £85m.

The placing will see the firm issue 14.1 million new shares at 495p each, a 7.7 per cent discount to Tuesday’s closing share price of 536.50p.

Meanwhile, Dairy Crest reported a surge in full-year pre-tax profits from £40.3m to £179.2m after booking a pension surplus.

Revenue at the group, which is also behind Clover and Country Life, grew 10 per cent to £456.8m.

Adjusted pre-tax profit rose more modestly from £60.6m to £62.3m.

Boss Mark Allen said: “This has been a year of considerable progress for Dairy Crest. We have delivered a strong performance, broadly maintaining our industry-leading margins against a backdrop of unprecedented cost inflation in the butters market.

“Our brands are in good shape. Cathedral City has had a good year growing value, volume and market share, and we see plenty of room for further growth for this industry-leading brand.

“We have seen good momentum in revenue growth going into the new financial year.”