Dairy Crest shrugged off a record high cream price to deliver revenue and profit growth in the first half, while changes to pension schemes reduced the financial burden on the company.
Revenue for the maker of Cathedral City cheese in the six months to 30 September was up 16 per cent to £220.1m.
Adjusted pre-tax profit rose eight per cent to £20.6m. After exceptional income due to the elimination of the group's pension deficit, reported profit before tax was up 871 per cent to £151.4m.
Dairy Crest nudged its interim dividend up by 0.1p to 6.3p.
Why it's interesting
Dairy product makers have struggled with the price of cream over the past year, as the ingredient has seen one of the biggest price changes since the devaluation of the pound. The wholesale price of cream rose 65 per cent in the year to 30 September.
But Dairy Crest said it had achieved growth by maintaining an efficient supply chain and cutting advertising spending on Country Life butter. This meant the product was the only one of Dairy Crest's core brands to decrease in volume, dropping 14 per cent while Cathedral City, Clover and Frylight all grew.
Cathedral City was particularly strong, now accounting for more than half (56 per cent) of branded cheddar sales in the UK and 20 per cent of the total everyday cheese market.
What Dairy Crest said
Chief executive Mark Allen said: "We have delivered good profit growth despite a record high cream price, which has a temporary but significant impact on input costs in our butter and spreads business."
He added: "While we expect butter input costs to continue to be challenging for the remainder of the year, we are confident in delivering our full year expectations."