Page last updated at 17:16 GMT, Tuesday, 30 September 2008 18:16 UK

Dairy Crest mulls factory closure

Dairy companies have faced increasing costs over the past year

Dairy Crest, the maker of Clover spread, has said that it will cut jobs and is considering closing a factory to deal with difficult market conditions.

The firm said there would be cuts at its head office and that a consultation on the future of its Nottingham dairy factory started on Tuesday.

Rocketing energy costs and higher milk, packaging and vegetable oil prices were to blame for the cost cuts, it said.

But sales showed double-digit growth in the the six months to September.

Its shares closed 1.7% lower at 400 pence.

Job losses

"There are over 215 staff in the Nottingham factory and, subject to consultation, the factory might be closed and there will be job losses on the back of it," said Mark Allen, group chief executive.

The consultation period takes 90 days.

The Nottingham site is predominantly a glass bottling operation which Diary Crest acquired in 2006.

Mr Allen also said jobs would be cut at the head office, but that "significant savings" would be seen next year rather than this year.

Dairy Crest also warned that it may raise prices, despite its strong half-year performance. It expects business at its dairies division - the arm which sells milk and flavoured milk - to weaken compared with last year.

The dairy market is proving tough as costs edge higher and consumers look for cheaper alternatives.

Food maker Uniq tried to cut costs by closing its chocolate dessert factory and dairy company Robert Wiseman issued a 2008/09 profit warning in May, citing higher costs.

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