UK dairy food company Dairy Crest saw its shares fall 5.9% by 11am on Thursday after it reported a 59% slump in profit.

The company's dairy business saw a 90% fall in profit from the previous year as it continued to struggle in the competitive diary market.

Dairy Crest last year agreed to sell its dairy operations to Muller UK & Ireland for £80m (€112m, $125m) but the two are yet to agree a deal. Chief executive Mark Allen said the sale would benefit the UK dairy industry as well as the farmers.

"It creates a more sustainable, more efficient industry that has a capability to invest in a way that it doesn't today," Allen said in a statement accompanying its full-year results.

In January 2015, Dairy Crest lost a third of its fresh milk contract with supermarket Morrisons to rival Arla.

The company also faced challenging times with its cheese and spreads division and saw its overall revenue fall 4% to £1.33bn, despite a strong growth in the Cathedral City brand.

Dairy Crest's Cathedral City range of luxury cheddar cheeses currently holds 50% of the branded cheddar market.

"People look for different formats," Allen commented on the company's struggle on the spreads and cheese market. "They move away from sandwiches to wraps, etc. But we're actually performing okay. Clover is performing in line with the market. And in Butter, our butter brand Country Life is actually doing very well in spreadable, it's outperforming the market."
The dairy producer has been working on improving margins, but still faced high overall costs.

"We've had a year where we're transforming our business and I think it's inevitable in a year like that that we will incur a lot of costs on exceptional restructuring costs," Dairy Crest financial director Tom Atherton said.