Demand for Cathedral City cheese lifts sales at Dairy Crest

Cathedral City cheesemaker Dairy Crest was the cream of the crop in the City on Tuesday, after it posted a first-quarter sales leap despite challenging conditions.

Chief executive Mark Allen praised a “strong performance”, sending the shares up 12p to 480.6p. The manufacturer was one of the biggest risers on the FTSE 250.

Combined revenues at Dairy Crest’s main brands rose 6%. The stand-out performers were Cathedral City and Clover spread, which boosted sales by 10%.

Allen said the “butter market remains challenging”. It has been feeling the squeeze from higher cream prices.

However, he was upbeat and revealed several product launches are planned. He added the “functional ingredients” arm “is becoming more established”.

The division comprises ingredients such as galacto-oligosaccharide (GOS), a by-product of the cheesemaking process. GOS stimulates the growth of gut-friendly bacteria in the digestive tract, and Dairy Crest is selling it to infant formula makers.

A note from Shore Capital said:"Dairy Crest is well placed to invest to drive future growth."