Meadow Foods to invest £2.5m in dairy sites

Meadow Foods, the UK's leading independent dairy group, has announced plans to invest over £2.5m in new production and storage facilities at its manufacturing sites in Chester and Holme-upon-Spalding Moor, Yorkshire.

The decision follows another strong financial year for the company. During the 12 months ended 31 March 2009, Meadow posted a pre-tax profit of £4m on turnover of £239m and reduced net borrowings to £6.8m.

Although sales and profits were marginally lower than in the previous year (2007/08: £5m profit on £244m sales), Meadow has described the results as positive given the extreme volatility of dairy markets during the period.

Managing director Paul Deakin said: "Meadow has generated stable profits in a volatile dairy market and this has put the group into a strong position for the year ahead. We have lower borrowings than many of our competitors, a strong credit rating, and highly supportive shareholders and bankers. We will continue to invest in making our business as efficient as possible and will also look for further opportunities to grow by acquisition as the dairy sector rationalises."

The planned £2.5m investment includes a proposal to build a new cold storage warehouse at Meadow's Chester site, which will house butter and fat-based products that are used in food manufacturing by customers including Premier Foods, Burton and Bakkavor. The majority of the company’s chilled storage is currently handled off site by a third party contractor. Investment in a new warehouse, which is subject to local planning permission, would enable Meadow to cut transportation costs and 100,000 road miles a year.

Capital expenditure in process control and raw material processing is also scheduled for the group's sweetened dairy products manufacturing site in Holme-upon-Spalding Moor, Yorkshire. Investments in new production facilities will allow Meadow to increase output and the range of products made for the company's blue chip customer base.

Meadow Foods has also announced two board director changes following the introduction of a new management structure six months ago. Norman Oldmeadow, one of the two founders of Meadow Foods, will retire from executive responsibilities with effect from 31st May. He will continue as a non-executive director and represent Meadow Foods through his involvement with a range of trade organisations.

Paul Deakin, managing director since April 2007, is also stepping down from full time executive duties at the end of May and Simon Chantler, the company's largest shareholder, will become executive chairman at that time. Paul, a former corporate financier with Rothschild, joined Meadow Foods with a specific mandate to restructure the business and its management team with a view to improving the company's long term profitability. This process is now complete and Paul will take up a new non-executive director role with the business.

Simon Chantler said: "Norman Oldmeadow and Paul Deakin have both made invaluable contributions to the group during their time with the business through their respective areas of specialist expertise. Norman has given the company unrivalled market understanding and a clear vision for growth and development. Paul, with his financial and management expertise, has restructured the company to give us a long-term platform for future stable profitability. I look forward to continuing working with them both in their new non-executive roles with the group."