UK milk processing giant Dairy Crest has announced a reorganisation of its business aimed at cutting costs further to maintain a profit.

The shake-up follows the sale of a number of Dairy Crest assets, including its St Hubert spreads brand which went last year. Dairy Crest said on Tuesday (19 February) that the move is designed to help it become "a more focused, less complex business."

From the start of the financial year on 1 April, Dairy Crest will consolidate its organisation into a single structure, with an integrated supply chain. The move, which follows the introduction of direct supply contracts by competitor Arla Foods on Monday, will save Dairy Crest an estimated £5 million annually, the company said.

The dairy processor owns brands including Cathedral City cheese, Clover spread, Frijj milkshakes and Country Life butter. 

In addition to measures designed to cut costs and 'increase efficiency', Dairy Crest's Finance, Managing and Corporate Affairs Directors will all leave the company as part of the restructuring. The directors will depart between March and May, though Finance Director Alastair Murray will be replaced. After the reorganisation, Dairy Crest said it will continue to report its results for Cheese, Spreads and Dairies separately.

Mark Allen, Chief Executive of Dairy Crest, commented "The reorganisation announced today is right for Dairy Crest.  It reflects our focus on consumers and customers as we continue the progress we have made in simplifying the business and becoming more efficient.  It will reduce our annual overhead costs [and] has also provided an opportunity to refresh the senior management team.  It allows the next generation of talented managers in the business to develop and attack the opportunities we have in front of us with renewed vigour."

Dairy Crest's aim is to cut losses in its core milk business; supermarket price wars and low prices for some dairy products are said to have impacted on the company, but strong performance from its portfolio of large brands have provided buoyancy. Dairy Crest Chair Anthony Fry said the shake-up would "optimise the company's position in a competitive sector."

Also on Tuesday, Dairy Crest announced the renewal of its three-year contract with Sainsbury's supermarkets, though its conditions will change; Dairy Crest said, "our ongoing cost reductions are expected to offset any financial impact on our business."