After increasing its milk price by 1.5 eurocent per kg in April and maintaining the price into May, the Arla Foods amba on account price will reduce by one eurocent per kg with effect from 25 May 2015.

When applied to the UK standard litre, the impact will be a reduction of 0.84 pence taking it to 24.99 pence.

Commenting on the announcement, Ash Amirahmadi, Arla UK’s head of milk and member services, said:

"Following a brief market upturn, which we were able to reflect in our milk price, the commodity markets continue their negative trend. Whilst we continue to do everything possible to minimise the impact, unfortunately, we have not been able to buck the market.The entire global dairy industry has been affected by these market forces."

Dairy Crest pre-tax profits halved.

Meanwhile Dairy Crest reveal Pre-tax profits have more than halved after its milk operations, which it is in the process of selling to Muller for £80m, took a 90% nose dive from £18.8 m in 2013/14 to £1.8m in 2014/25.

For the year to 31 March 2015 the business reported a pre-tax profit of £22.1m compared with £54.2m for the year before.

Commenting on the results, Mark Allen, Chief Executive, Dairy Crest Group plc said:

“This has been another year of significant progress for Dairy Crest.  We have grown combined Cheese and Spreads sales despite the deflationary market environment.  We have also delivered an encouraging improvement in the combined margin of these businesses.  Cathedral City has again outperformed and accounts for over 50% of retail sales of branded cheddar.  Our focus on product development has underpinned these results and our investment in a new innovation centre will support this.  We have again met our target to deliver annual cost savings of over £20 million.  These include consolidating our butter and spreads production onto one site.


We have agreed to sell our Dairies operations.  The conditional sale is a positive development for Dairy Crest and the wider UK dairy sector.  Shareholders have approved the sale and the process to obtain regulatory approval is on track.  Completion of the sale will result in Dairy Crest operating from five well-invested manufacturing sites.  It will be a much simpler, more focused, predominantly branded business.  It will also have exposure to the growing infant formula category and emerging markets.
 

Looking ahead, Dairy Crest is well positioned for sustainable, profitable growth.  Over the coming year as a whole we expect results to benefit from the continued growth of Cathedral City, ongoing cost savings and the completion of our project at Davidstow where we will add value to our whey stream by producing ingredients for infant formula.  This growth will be second half weighted.


We expect that our net debt, which at the year end remains within our target range, will fall once we have completed our major investment projects.  The receipt of the proceeds from the sale of our Dairies operations will accelerate this reduction.”