Days after Robert Wiseman gave warning on profits, Dairy Crest has deepened the gloom on its sector. Shares in the mid-cap food producer fell by a quarter after it cautioned that full year profits would miss forecasts.

Its problems are three-fold. Increased discounting by retailers, lower ingredients prices (especially skimmed milk powder), and the difficulty of generating profits from the sale of surplus property. That uncomfortable combination of pressures on the bottom line is a marked deterioration from the outlook given at the end of September, when the company simply alluded to increasing uncertainty in the second half of its financial year.

At 250p, the shares trade on just 5 times forecast earnings and yield 10 per cent. However, with net debt of £475 million - greater than its stockmarket value - and profit growth stalled, that is not obviously cheap. Avoid.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts