The shake-up at Dairy Crest, which has already seen it close
some milk processing plants and sell off its French business, extended into the
boardroom, with the loss of two senior managers – including one revealed to
have retained a key contract.
The UK dairy group said it was ditching a multi-division
structure, after last year's sale of the French St Hubert business, and the
disposal in 2009 of its interest in Yoplait yoghurt, left is a "less complex business".
The new structure, tying in the dairies operations to the leading
brands such as Cathedral City cheddar and Country Life butter," will facilitate
best practice, eliminate duplication and maintain Dairy Crest's strong focus on
profit delivery", the group said, estimating cost saving at £5m or more a year.
"The reorganisation announced today is right for Dairy Crest,"
Mark Allen, the Dairy Crest chief executive, said.
"It reflects our focus on consumers and customers as we
continue the progress we have made in simplifying the business and becoming
However, the simplification has meant the departure of two
board members - finance director Alastair Murray, after 10 years in the post,
and Toby Brinsmead, the head of the dairies division.
The announcement of Mr Brinsmead's departure came the same
day as Dairy Crest revealed that, under his leadership, the dairies division
had retained a key three-year contract with Sainsbury, the supermarket chain,
against competition from Arla, which is beefing up its UK operations.
"That's quite tough," a Dairy Crest spokesman told
"But we are moving from two divisions to one, but had two
managing directors – one had to go."
Keeping the Sainsbury contract, which accounts for about
one-third of Dairy Crest's retail volumes, and keeping it had come at a cost, with
its conditions "to change from 2014", the group added.
"Our ongoing cost reductions are expected to offset any
financial impact on our business."
Mr Allen added that the management revamp would allow "the
next generation of talented managers in the business to develop and attack the
opportunities we have in front of us with renewed vigour".
Mr Murray will be replaced by Tom Atherton, Dairy Crest's director
of financial control.
Tuesday's announcements received a broadly positive response
from analysts, with Peel Hunt raising to 450p, from 440p, its target price for
Dairy Crest shares, on which it maintained a "buy" rating.
Panmure Gordon analyst Graham Jones, while maintaining a
430p price target on the shares, said that the management shake-up "make sense
in the context of a simplified business", and while the retention of the Sainsbury's
contract "removes a key risk".
The shares stood 0.2% higher at 421.8p in morning deals in