Clifford hit by milk price war

PRICE competition in the battle to supply supermarket milk and the costs of modernising its Kidlington dairy caused a sharp fall in profits at Clifford Foods, writes Alison Eadie.

The warning issued by the company in July proved correct, with pre-tax profits of pounds 1.03m in the half-year to the end of June against pounds 2.55m on unchanged turnover. The dividend was unchanged at 4.4p a share.

Fruit juices, drinks and doorstep milk rounds, two-thirds of which are franchised, did well. The franchising of milk rounds has helped arrest the decline of doorstep deliveries and Clifford is canvassing hard to try to boost sales of food from the milk float.

Milk price increases, in July to retailers and in September on the doorstep, are holding, but the market remains tough, Martin Bunting, chief executive, said.

Trading in the second half is expected to be significantly better. New factories are generating better orders and the company has 40 to 50 new products to roll out before the end of the year, including vegetarian chilled food and carbonated fruit juices, Mr Bunting said.

The company expects to end the year with gearing slightly above 30 per cent and hopes to maintain the final dividend. The shares were unchanged at 390p.