Dairy Crest Announces Reorganisation, Extends Sainsbury's Supply Contract

Dairy Crest, the leading UK-owned dairy foods company, has announced a reorganisation, including Board and other senior management changes. Dairy Crest has become a more focused, less complex business.

19 Feb 2013 --- The sale of its stake in Yoplait Dairy Crest in 2009, the creation of a unified Dairies business and the disposal of its French Spreads subsidiary, St Hubert, last year have provided the opportunity to simplify the business further. As a result, from 1 April 2013, the start of our financial year, Dairy Crest will consolidate its organisation into a single structure focused on consumer driven growth with an integrated supply chain. This is consistent with its long-term strategy to build added value sales and drive efficiencies.

The new organisation, focused on consumers and customers, will facilitate best practice, eliminate duplication and maintain Dairy Crest's strong focus on profit delivery. Annual cost savings of at least £5 million are anticipated.
 
After the reorganisation, Dairy Crest will continue to report its results for Cheese, Spreads and Dairies separately.
 
After nearly 10 years as Finance Director, Alastair Murray, is leaving to pursue other business interests. He will be succeeded by Tom Atherton who has been Dairy Crest's Director of Financial Control for the past four years and has worked for Dairy Crest for seven years. Prior to that Tom held senior finance positions in Logica plc and Thorn plc. He is a Chartered Accountant, having qualified in 1995. This change will take place on 23 May 2013, following the announcement of Dairy Crest's preliminary results.
 
During the last ten years Alastair has played a key role in the success of Dairy Crest. In this period the Company has focused more heavily on its key brands and has pursued a strategy of reducing risk and improving the quality of its earnings. Alastair has played a major part in the simplification of the business and, notably, in reducing exposure to future pension scheme risks. He leaves the business in a strong financial position.
 
Martyn Wilks, Executive Managing Director, will remain on the Board and will lead the demand side of the reorganised business with particular responsibility for driving growth. From 23 May 2013, the three executive directors on the Board of Dairy Crest Group plc will be Mark Allen, Martyn Wilks and Tom Atherton.
 
The reorganisation will result in other changes to the senior management team. Toby Brinsmead, Managing Director, Dairies will leave the business in May 2013. Toby has worked for Dairy Crest since 1998 during which time he has held a number of senior roles including Finance Director of Retail Milk and Managing Director of Retail Milk, before taking on his current role in 2011. Toby led the creation of a unified Dairies business and oversaw the modernisation of its supply chain. He will step down from the Management Board on 31 March 2013.
 
Mike Barrington, who steps up to be Group Supply Chain Director from the Dairies business, will head the unified supply chain and will be responsible for providing an integrated, efficient service to customers. Mike joined Dairy Crest in 2011 having previously held senior supply chain roles with Kraft Foods and Cadbury Schweppes plc.
 
Mike Barrington and Robert Willock, who becomes Group HR Director, will join the Management Board from 1 April 2013. Arthur Reeves, Corporate Affairs Director, and Roger Robotham, Director of Corporate Development, will step down from the Management Board from this date. Arthur and Roger will remain with the business and continue to provide the benefit of their many years' experience to the new team.
 
 
Anthony Fry, Chairman of Dairy Crest commented: "The reorganisation announced today continues the decisive changes made by the Dairy Crest management team over recent years to optimise the company's position in a competitive sector."

"Alastair has been a Finance Director of the highest quality with an excellent reputation both within the business and outside. I have been fortunate as Chairman to have had someone who has contributed so much to the company, for which he has my personal thanks as well as that of all my Board colleagues. He leaves Dairy Crest with our very best wishes for his future."

"I am delighted to welcome Tom, who has an in depth knowledge of Dairy Crest and broad experience, to the Board. We have all worked with Tom over recent years and I am confident that he will step up to this new challenge."

"I also want to thank Toby for all he has done for the business, in particular his important work in creating a unified Dairies business. He leaves a more robust business and he has the sincere thanks of all his colleagues."

"Both Alastair and Toby should be proud of their achievements while they have been with Dairy Crest."
 
Mark Allen, Chief Executive of Dairy Crest, commented: "I would also like to thank Alastair and Toby. They have played an integral part in our success over recent years.
 
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 by at least £5 million. It 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."

The news came as Dairy Crest announced that it has retained its contract to supply liquid milk to Sainsbury’s from February 2014, after a competitive process.

The new contract is for 3 years until 2017. Although the conditions of the contract will change from 2014 our ongoing cost reductions are expected to offset any financial impact on our business.

Dairy Crest continues to focus on driving efficiencies so it can meet customers' demands for cost, quality and service. In its IMS on 7 February 2013 it reported that it was on track to exceed its annual cost savings target by delivering savings of around £23 million for the year ending 31 March 2013 and that it had already identified several meaningful projects for the following year.

Mark Allen, Chief Executive of Dairy Crest, commented: "We are delighted to have retained our Sainsbury's business. Our track record of making efficiencies allows us to supply our customers with competitively priced milk, pay our farmers a fair price and move towards our medium-term target of 3% return on sales in our Dairies business."