Dairy Crest staff are in for a bonus top-up averaging more
than £2,000 each after the dairy group sold a former dairy depot for £17.6m, a
windfall from the decline of the milkman as consumers switch to supermarkets.
The UK milk processor said it would book a £15m profit on
the disposal of its Nine Elms site in south London, formerly a depot for
serving doorstep deliveries.
Of this, £2.5m will be split between Dairy Crest's 1,200
staff as a payout on top of their existing staff bonus, about which the group declined
to reveal financial details.
"It determines people's remuneration. It can get very
sensitive," a Dairy Crest spokesman told Agrimoney.com.
The company's annual report says that "since 2011 the vast
majority of staff benefit from being part of a bonus scheme that is linked to
their performance, our values and the results of the business".
The group's executive bonus scheme awarded chief executive
Mark Allen a £272,000 payout in 2012-13.
Decline of the milk
The sale of the depot comes amid a rolling programme of
asset sales enabled by the switch by many consumers from buying from milkmen to
purchasing from supermarkets, although Dairy Crest does offer one of the few
remaining doorstep delivery schemes, Milk and More.
"Residential milk deliveries have steadily declined over
recent years as supermarkets have grown their share of the market," the group
"Property profits from the sale of depots such as Nine Elms
offset the costs associated with this decline," although the London site is
seen as a particularly valuable asset.
"We anticipate profits from the sale of depots we no longer
require are likely to return to a more normal £5m-10m in future years."
'Particularly valuable locations'
According to Credit Suisse, Dairy Crest sill has some 70-80 depots, "some in particularly valuable locations in the South East.
"There is no official landbank value, but we'd guess the estate is worth something in the order of £80m," the bank said.
Operating efficiencies are also enabling the release of sites, in meaning "we need to have fewer depots", the Dairy Crest spokesman said.
The Nine Elms windfall will lift profits "ahead of previous
expectations" despite the extra payout to staff, and a disappointing
performance in spreads, said the group, whose brands include Clover, Country
Life and Utterly Butterly, besides Cathedral City cheddar and Frijj milk
The statement was viewed by Numis analyst Charles Pick as
providing "mixed news", with the property profit disguising trading in spreads
which "has been grim and worse than expected".
The broker kept at "hold" its rating on Dairy Crest shares,
with a price target of 493p.
Panmure Gordon also kept a "hold" recommendation, but raised
its target price for the shares by 50p to 550p.
The stock stood 0.2% higher at 512p in morning deals in London.